Coal Investors on Edge as China Lifts Tariff (ANR) (WLT) (BTU)

December 19, 2012 11:56 AM EST
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Reports yesterday say China will lift its 40 percent export tariff on coke coal and semi-coke coal beginning on January 1st. The news has U.S. coke exporters on edge, since according to analysts at Nomura, China has significant excess capacity.

"China coke exports could compound current market dynamic struggling with oversupply and lowest prices since 2009," said analyst Curt Woodworth. "With coke spot prices at their lowest level since late 2009, we don't see much ability to push more tonnes into the current market environment."

In a previous note, Woodworth warned investors to avoid this sector as global trends reverse after years of tight supply. This normalization of supply, in Woodworth’s view, “is going to be painful for higher cost players”.

Nomura sees less short term impact on met coal prices.

U.S. listed coal stocks include Arch Coal Inc. (NYSE: ACI) Alpha Natural Resources, Inc. (NYSE: ANR), CONSOL Energy Inc. (NYSE: CNX), Peabody Energy Corp. (NYSE: BTU), Teck Resources Limited (NYSE: TCK), Walter Energy (NYSE: WLT).

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