Peabody shares tumble on recession impact concerns
Shares of Peabody Energy Corp. were falling Thursday in midday trading on concerns that a recession could reduce demand from power plants.
The 13-member Bloomberg U.S. Coal Index dropped 11 percent at 12:11 p.m. in New York, the lowest since July 18, 2005.
St. Louis-based Peabody was trading around $36.50, down about 11 percent.
“There’s a shortage of coal propping up prices but apparently an oversupply of coal equities,” James Rollyson, a coal industry analyst at Raymond James Financial Inc. in Houston, told Bloomberg News.
Rollyson, however, said the selloff seemed to be overdone.
“These companies are trading as if the coal price was $40 a ton, not $120. The contracts are solid and they’re generating a lot of cash through 2009 and 2010,” he said.
