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Coal ETF Is Having a Bad Year, and the Outlook Only Looks Gloomier

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Coal prices are on pace for their biggest annual decline in over a decade, weighing on a coal sector-themed exchange traded fund, on declining demand for coal-fueled power and steel.

The VanEck Vectors Coal ETF (NYSEArca: KOL) has declined 14.2% in 2019 as the spot price of thermal coal plunged 39% to $5.35 per metric ton in 2019.

At its current pace, the drop in coal prices would be the largest one-year decline since S&P Global Platts started keeping records going back to 2007, the Wall Street Journal reports.

Contributing to the fallout in coal prices, a number of factors like a drop in power demand, an abundance of liquefied natural gas and China’s shift to become more self-sufficient in coal weighed on the market.

Furthermore, falling steel production across Europe, India and Japan has weighed on the price of coking coal, which is used to manufacture the alloy metal. Spot prices coking coal have also plummeted by 38% this year to $136 per metric ton.

The falloff in demand has dealt a blow to U.S. coal producers, which have experienced a series of bankruptcies, including Blackhawk Mining LLC and Westmoreland Coal Co.

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