August 28, 2017 Read More →

U.S. Coal Producers ‘at the Whim of Chinese Policy Makers’

Wall Street Journal:

China’s reemergence as a coal importer has boosted the fortunes of U.S. producers who are now shipping more coal abroad than any time in the last two years.

The trend has helped solidify a business that at the beginning of last year was suffering through a spate of bankruptcies and threatened with more. Revenue at publicly traded U.S. coal companies grew 19% in the first half of this year compared with the same period a year ago, and the biggest gains came at companies helped the most by exports, according to data compiled by Doyle Trading Consultants, a coal-market-analysis firm.

Market forces, especially China, have a much bigger influence than anything the Trump administration has done, analysts said. While that has worked in the administration’s favor so far, it could also overwhelm its deregulation efforts and put the coal industry into retreat if those factors swing back the other way.

The rebound has been so dependent on exports that U.S. producers face a big risk if China undoes last year’s policy changes. Chinese coal production is showing signs of picking up again and the government is starting to block some imports to support domestic miners, researchers at Italian ship broker Banchero Costa said Wednesday. With U.S. year-to-date production up 14% from last year, the specter of oversupply is rising again, analysts said.

“When you’re at the whim of Chinese policy makers, it’s not really a great place to be,” said Andy Blumenfeld, head of market analytics at Doyle. “Beyond the first quarter of next year, it becomes very risky.”

More: ($) The Big Name in Coal’s Resurgence: China

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