U.S. Coal Companies' Shares Drop on China Import Data


". . .we consider this (share drop) is an over-reaction."

U.S. coal mining shares fell on Monday after data showed China's coal imports dropped 11% in the last month, even though exporters expect a booming market in the Pacific region for the next few years.

"The China data were a little down and we always get a knee-jerk reaction when they come out," said Jeremy Sussman, an analyst with Brean Murray Carret & Co.

But even so, he said, the import numbers were "fantastic" relative to historical figures and "as long as the numbers look good, we consider this (share drop) is an over-reaction."

Indeed, the latest official Chinese customs data showed coal imports rose 219.5% from a year earlier to 11.14 million tons in October.

But the October volume was 11.2% lower than in September. China's coal imports hit a record high of 16.07 million tons in June.

Many U.S. producers have recently considered boosting coal exports as China, the world's largest coal producer and consumer, has become a net coal importer this year.

Just this month, Peabody Energy CEO Greg Boyce said he expects seaborne coal trade in the Pacific region to grow by more than 7% annually for several years, underpinned by robust demand from China and India.

After demand for thermal and coking, or metallurgical coal, slumped in traditional importers such as Japan and Korea earlier this year, China began importing huge volumes of coal due to the shutdown of many unsafe mines in the country.

"China is going to continue to be the largest importer of metallurgical coal and, we think, thermal coal," Boyce said.

"Go back five years and they were an 80 million (-ton) plus a year net exporter, so it has been a significant shift that we think is structural."

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe