From Investors' Business Daily,
Yanzhou Coal Mining (YZC) and L&L Energy (LLEN) led a sell-off among China-based coal producers. But some U.S. coal producers gained ground, led by Peabody Energy (BTU) and Consol Energy (CNX).
China's miners fell on reports that the country's National Development and Reform Commission is "studying adjustments of VAT (value-added tax) and port charges relating to coal imports.
"The country's energy commodity imports have declined recently, despite coal shortages and a looming electricity shortfall heading into the high-demand summer season. Analysts say lower tariffs and port charges could encourage more imports, helping hold down prices in China's tight coal market..........................
Although China does import U.S. metallurgical coal for use in steel production, chances are slim that it will turn to North America for more thermal coal, according to analyst Meredith Bandy with BMO Capital Markets. China likelier will buy coal from Australia and other sources that otherwise would end up in Europe. The Europeans probably would make up the difference via purchases from the U.S. Peabody could profit via the Australian and U.S. channels. "Peabody is the U.S. stock that would most directly benefit," Bandy said. "About half their value comes from Australian operations."
On the metallurgical side of the business, miners like Walter Energy (WLT) also face a potential windfall.
On the side, some analysts are betting on labor strikes in Australia to boost shares of coal companies.
Australian miners voted Thursday to give their unions the right to strike. The unions are in negotiations with BHP Billiton (BHP)-Mitsubishi Alliance, the world's largest producer of seaborne met coal."If this strike occurs — and we don't know that it will, but if it does — these met coal guys will probably go crazy," Bandy said.Disclosure: The author of this post does not own any positions of the above mentioned stocks as of June 7, 2011