S&P: Despite good conditions, outlook on coal companies isn't

The meteoric rise in spot coal prices over the past 18 months has not largely translated into positive outlooks for coal producers, according to a report by Standard & Poor's.

The article, titled "Why High Prices Are Not Energizing Outlooks On U.S. Coal Producers," is part of a special S&P report on the significance of high energy prices in next week's CreditWeek.

"Amid a robust domestic economy and elevated oil and natural gas prices, it's no surprise that coal prices are high," said S&P's credit analyst Dominick D'Ascoli. "Add the strong demand from Asia and low electric utility inventories, and one can see that these are good times for U.S. coal producers."

But despite favorable conditions, S&P's outlook for most U.S. coal producers is stable, rather than positive.

Among factors that mitigate coal companies' credit quality outlooks, as cited in the report, are increased debt, weak liquidity, business-risk issues, escalating costs and mine disruptions.

Of the eight rated coal companies, six have stable outlooks, while the remaining two companies have a positive and a negative outlook, respectively, according to the report.

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