Shares of Arch Coal Inc. continued falling Thursday after a Morgan Stanley analyst took the coal producer off a list of preferred stocks, saying warm weather spells trouble for coal prices.
Morgan Stanley analyst Henry H. McVey struck Arch Coal from the Focus List.
“We are increasingly concerned that high inventories and warm weather will prove to be the enemy of an improvement in fundamentals,” he wrote in a research report. “Warm weather has thwarted our belief that coal fundamentals were bottoming.”
Arch Coal, based in St. Louis, produces coal through 21 mines and sells it to electric power producers. Temperatures in the U.S. were well above normal in December, according to the National Weather Service, and that starves demand for electric power to heat homes and businesses.
Shares of Arch Coal fell $1.07, or 3.7 percent, to $27.65 in afternoon trading on the New York Stock Exchange. The stock fell 4.6 percent on Wednesday.
Other coal producers also languished. Consol Energy Inc. lost 75 cents, or 2.5 percent, at $29.47; Peabody Energy Corp. dropped $1.30, or 3.4 percent, to $36.54; Alpha Natural Resources Inc. fell 9 cents to $13.55; and Fording Canadian Coal Trust lost 61 cents, or 3 percent, at $19.99.
All the stocks trade on the New York Stock Exchange.