Peabody Energy Corporation (BTU), Alpha Natural Resources, Inc. (ANR): Is This Coal Giant Back on Track?

Talking about costs – Arch Coal Inc (NYSE:ACI) reduced its cash costs by almost 17% in the latest quarter. Moreover, the company has plans of cutting capital spending by $20 million this year.

As there is still an oversupply of met coal in the market, Arch Coal Inc (NYSE:ACI) doesn’t expect to do wonders in the next quarter. Thermal coal’s demand is expected to be better this year, but its price is also on the lower side. As a result, Arch’s revenue won’t grow that much during the next quarter. Therefore, in order to reduce its losses, the company will have to keep on cutting costs.

Conclusion
At the moment, thermal coal’s demand is relatively better than last year’s. However, in the long run, thermal coal faces tough competition from natural gas. Given the fact that more organizations and countries are putting their efforts into reducing carbon emissions, coal’s future looks bleak.

Peabody Energy Corporation (NYSE:BTU) is trying its best to minimize its operating costs so it can remain competitive in a declining coal market. But, with coking coal facing low steel demand and thermal coal battling low gas prices, coal’s long-term prospects don’t look that bright.

The article Is This Coal Giant Back on Track? originally appeared on Fool.com.

Waqar Saif has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 

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