While most stocks underwent a correction in September, beaten-down coal companies were among the few that actually saw strong performance. The coal ETF (KOL) rose about 5% with names such as Arch Resources (ARCH) rising a staggering 33%.
Most of the gains have been in metallurgical coal producers that supply coal to steelmakers. There has been an uptick in demand for met coal from China which has caused prices and sales volumes to rise. Thermal coal (used for power) has been a bit weaker but has also seen an uptick in prices and sales volumes.
Interestingly, Alliance Resource Partners (ARLP) has been left out of the rally. The company produces both thermal and metallurgical coal. The stock is trading at nearly its lowest price ever despite recently seeing an uptick in sales and prices. The company is no doubt in a difficult position after seeing sales decline over 50% Y/Y