One of the largest U.S. producers of thermal coal, St. Louis-based Patriot Coal, filed for Chapter 11 bankruptcy reorganization Monday, the largest casualty thus far of coal demand that has spiraled to a 24-year low.

Coal fueled 35% of U.S. electricity generation during the first four months of this year, down from 44% during the same period of 2011. Patriot is one of a number of U.S. coal producers, including Peabody, Arch Coal and Alpha Natural Resources to have sustained significant share price losses in the past year.

Patriot has lost more than US$7 billion in value. The company reduced its thermal coal production by more than 4 million tons, trimmed costs and laid off 1,000 employees and contractors this year

Eoin Treacy's view The decline in US natural gas prices has perhaps put most pressure on coal producers as the commodity became progressively less competitive. US government policy has also been distinctly ambivalent toward coal usage which has been an additional headwind for the sector. The ratio of coal to natural gas hit a peak of 30 times by late April, following an impressive advance and has since pulled back sharply to unwind the overbought condition and test the progression of rising reaction lows. This will ameliorate the dire situation for weaker coal companies somewhat but the ratio will need to fall further to bolster their competitiveness.

US coal producers have understandably experienced the most downward pressure since low natural gas prices are a North American phenomenon. (Also see Comment of the Day on May 18th). Peabody Energy, Arch Coal, Consol Energy, Walter Industries, Alpha Natural Resources, Natural Resource Partners LP and James River Coal all remain in relatively consistent downtrends and will need to break progressions of lower rally highs to question medium-term supply dominance. Alliance Holdings GP LP has held up better, not least because of its 6.04% yield. However, the share will need to sustain a move back above its 200-day MA to suggest a return to demand dominance beyond the short term.

Australian coal miners such as New Hope Corp and Whitehaven Coal have sustained moves below their respective 200-day MAs and remain in relatively consistent downtrends. While they have paused of late, clear upward dynamics will be required to suggest mean reversion is underway.