Competition Increases For Alpha Natural Resources, Inc (NYSE:ANR)
Coal-fired power generation is fast fading in the United States even as carbon emission concerns are on the rise and regulatory scrutiny has also increased. Another reason why the use of coal has been on the decline is the availability of cheap natural gas. All of these are hard facts and the fact also is that gas production in the United States is changing the competitive-landscape of numerous companies and this could indicate that coal companies do not have much improvement to look forward to.
Kevin Crutchfield, the Alpha Natural Resources, Inc (NYSE:ANR) Chief executive Officer said that a large part of their thermal-coal that is produced from the Central Appalachian area is actually out of the market when natural-gas prices are below $4.00. Natural gas is cheap and that throws the demand for coal, out of gear in the electricity markets.
Apart from this, numerous companies are rushing to construct natural-gas generators and there is a glut of these in the electricity market to such an extent that there has been no change in the average electricity-cost in 5 years. This is not a very pretty picture for utilities but it proves to be affordable for numerous other industries in the U.S.
Why it affects the domestic coal market even more is because the same trend is being seen in other markets as well like the energy-intensive manufacturing industries. Instead of relying on metallurgical-coal for the production of pig iron, companies that manufacture steel are now switching to direct-reduces iron-facilities. These utilize natural-gas fired electric arc furnaces.
In Friday’s trading, Alpha Natural Resources, Inc (NYSE:ANR) rose by 5.20%. The opening price of the shares was $5.57, which climbed to an intraday high of $5.89 and dipped to a close of $5.87. Approximately 7.89 million shares were traded on Friday while an average volume of 8.87 million shares were traded over a 30 day period.