Here’s Why Coal Climbed Despite Downgrade

Coal stocks defied both downgrades and a slumping market on October 9.

Arch Coal (NYSE:ACI) closed up over 3 percent in Tuesday, despite getting a downgrade from Goldman Sachs. Goldman put a “Sell” rating on the stock with an adjusted price target of $5, below the 52-week range low of $5.16.

Goldman weighed in on a number of coal stocks, hitting Walter Energy (NYSE:WLT) with “Sell” rating and an adjusted price target of $27, below the stock’s 52-week range low of $29.75. Walter Energy finished up over 5% despite the downgrade.. Alpha Natural Resources (NYSE:ANR) closed up over 7 percent despite having a dollar knocked off its price target.

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Goldman has a “Buy” on Consol Energy (NYSE:CNX) and Peabody Energy (NYSE:BTU), both making gains of more than 4 and 5 percent respectively on Tuesday. James River Coal (NASDAQ:JRCC), not hit by an upgrade or downgrade, is up over 5 percent.

Foreign demand for energy could be behind the recent pops in coal stocks. Despite a steady domestic trend away from the fossil fuel — fueled by a crash in natural gas prices in 2009 and emerging EPA regulations — coal is and will continue to be a major source of energy for the world at large. According to Bloomberg, demand for coal in Germany, Europe’s biggest market, remains steady.

Meanwhile, mining company Cliffs Natural Resources (NYSE:CLF) is settled up2.64% Tuesday after popping as much as 5 percent on news that iron ore for immediate delivery to China rose 6 percent to $110.40 per ton.

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