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Post-election coal share rally fades at year-end

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Post-election coal share rally fades at year-end

A surge in share prices of major U.S. coal companies that followed the election of Republican Donald Trump in early November has largely faded at year-end, with stocks even or lower than they were in the days after the campaign ended.

Trump spent much of the election pledging support for the ailing coal industry, promising to increase production and "put miners back to work" with a rollback of Obama administration regulations often cited as detrimental to the industry.

The election results allowed a surge in investor optimism that the Republican would provide the relief needed to reverse years of decline in demand, production and earnings. According to an S&P Global Market Intelligence analysis of the market capitalization of major public U.S. coal producers, the post-election rally, combined with some market optimism, helped increase the value of the industry 130% from November the previous year.

In the weeks since, the momentum behind share prices seen in the immediate aftermath of Election Day has largely faded, with some companies seeing significant drops in value since early November.

In the hours after Trump's victory, the rally was most evident with shares of Peabody Energy Corp., which is still in the midst of bankruptcy reorganization. By Nov. 10, the company's shares had risen to as high as $14.80, up from $8.55 on the day before the election.

However, Peabody's shares have since fallen, reaching $5.43 at market close on Dec. 27, a 63.3% drop from Nov. 10.

Peabody recently announced that it had paid its bankruptcy financing package earlier than expected and released its Chapter 11 plan, outlining its intention to emerge from reorganization in the second quarter of next year.

Cloud Peak Energy Inc. also saw its shares fall from the post-election rally, sliding from $7.59 on Nov. 10 to $6.11 at the end of Dec. 27, marking a nearly 20% drop. Cloud Peak and other producers active in the western U.S. are anticipating some relief from the incoming administration, including possible action on the federal coal lease moratorium and assistance regarding stalled export terminals that would allow greater access to the Asian market.

Since Election Day, some U.S. producers have seen more modest progress, with CNX Coal Resources LP shares falling just 1.7% from Nov. 10 to Dec. 27 and Foresight Energy LP shares actually climbing 5.23% during that same period.

One exception to the slowing momentum came with Westmoreland Coal Co., which saw its shares continue to steadily rise from $14.72 on Nov. 10 to $18.57 on Dec. 27 — a 26.2% increase.

Emerging as early and consistent supporters of the Trump campaign, U.S. coal producers have been granted some early progress with the president-elect's Cabinet selections and policy announcements, most notably Rep. Ryan Zinke, R-Mont., to head the U.S. Department of the Interior.

Zinke has been a consistent coal advocate in Congress.

However, some of Trump's other selections to head energy and environmental agencies have been less certain in their dedication to following through on promises to support coal over other energy resources.