December 22, 2017 Read More →

2017: Long-Term Prospects for U.S. Coal Have Not Changed Much

 

SNL:

The past several months, for the coal sector, have largely been about operational and financial restructuring as it adapts to new market conditions. Several large companies that had filed for Chapter 11 bankruptcy completed the process in the first half of 2017 or earlier.

“2017 was really the year where the industry found its footing again after several very difficult years,” said Moody’s vice president and senior analyst Anna Zubets-Anderson. “We expect 2018 to be relatively stable.”

The long-term prospects for coal, however, have not changed much, she added. Absent some major action that would “interfere with price dynamics” of current energy markets, Zubets-Anderson said coal will likely continue to decline as it is replaced by natural gas and other energy sources.

Much of the coal industry’s recovery in 2017 can be attributed to a sharp spike in international prices for metallurgical coal. Ramaco Resources Inc. was able to take advantage of that spike and investor sentiment during its IPO earlier in the year, though Ramaco Executive Chairman and Director Randall Atkins told S&P Global Market Intelligence that he sees access to capital as an ongoing issue for the sector as a whole.

“I think we had a window of opportunity open early in 2017 when you saw the surge in met pricing,” Atkins said. “I think that window stayed open for a reasonably short period when you really think about it. … Despite the pop in the markets, you’ve really seen no greenfield projects, or very few, and those you’ve seen have been relatively small [operations].”

More ($): Coal finds its footing as markets, White House changed tide in 2017

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