Sector Snap: Coal-miner shares fall on output cuts

Steel manufacturers have announced up to a 20 percent drop in production, which likely will reduce demand for coal, analysts said.

Peabody Energy Corp. has indicated it will cut production growth at its Powder River Basin operations in Wyoming by 5 million tons next year, FBR Capital Markets analyst David M. Khani said Thursday. That comes on the heels of a similar announcement from Arch Coal Inc. about its Wyoming mine production.

In a research note to clients, Khani also noted reports of production cuts by global steel manufacturers.

His comments echoed those issued by JPMorgan analyst John Bridges who estimated steel-production cuts will be up to 20 percent.

"As the steel makers and miners enter the children's game of musical chairs that characterizes the international negotiation process, there will be pressure on the miners to avoid being the one with unsold tonnage, or waiting for a safe chair," Bridges wrote to clients this week.

In midday trading, shares of Consol Energy Inc. fell $6.39, or 20.3 percent, to $25.12, while Arch Coal declined $3.55, or 17.2 percent, to $17.07. Peabody Energy dropped $4.63, or 14.2 percent, to $27.65. Massey Energy Co. fell $1.96, or 9.9 percent, to $17.76.