NEW YORK (AP) -- Shares of coal companies fell Tuesday as concerns deepened that global demand will continue to decline after China lowered its economic growth forecast.
Coal producers already have been hurt because electric companies have been switching from coal to cheap natural gas to fuel their power plants. Natural gas prices are hovering around a 10-year low because a mild winter cut into demand and supplies are plentiful.
The switch has caused coal supplies to grow and prices to fall, prompting several companies to cut back on operations to keep overhead costs low while they cope with soft market conditions.
Consol Energy Inc. said Tuesday that it will idle a longwall mining unit at its southwest Virginia Buchanan Mine and cut back its continuous mining operating schedule to five days a week. The change will not involve layoffs. The Pittsburgh company attributed the change to building inventories and decreased international demand for its metallurgical coal, which is used in steel manufacturing.
Last week, Consol said that it would take similar actions at some of the Blacksville No. 2 mine operations in West Virginia.
Longwall is a traditional kind of underground mining in which a wall of coal — in some cases a mile or more long — is sectioned and taken out by machinery and conveyor belts.
China this week lowered its economic growth target to 7.5 percent from 8 percent as it tries to keep inflation under control. China is a huge importer of many raw materials, from coal to oil.
Jefferies analyst Subash Chandra told clients in a research note Monday that coal use for power generation fell by 17 percent in December, to 75 million short tons. Chandra estimated that 8 million tons to 9 million tons of the drop could be blamed on utilities switching to gas. The analyst estimated that monthly coal use in January and February will also decline.
In afternoon trading, shares of Consol fell 74 cents, or 2.2 percent, to $32.61 per share. Alpha Natural Resources fell 23 cents to $16.12. Arch coal fell 28 cents, or 2.3 percent, to $11.92. Peabody Energy Corp. lost 77 cents, or 2.5 percent, at $30.70.