As China Burns Coal, Which Stocks Benefit?
Posted on January 16, 2013 at 14:31 PM EST
China, which gobbles up commodities, keeps the lights on with coal. China’s consumption of steam coal amounts to 22% of world steam coal production, and monthly coal imports were near records in November, at 9.7 million metric tons, according to Matt Badiali , editor of the S&A Resource Report, in a piece out today. Miners BHP Billiton ( BHP ) and Rio Tinto ( RIO ) produce coal in Australia that can be easily shipped to Asia, and the trends could bode well. But these mining giants pull plenty of other commodities out of the ground and global miners’ shares have outperformed U.S. coal producers. Shares of BHP are up 2.5% over the past 12 months though Tuesday’s close, while shares of Rio Tinto are up 3.2% over the past year. BHP pays a 3% yield and Rio Tinto, 2.6%. Not all U.S. coal suppliers have the right kind of coal, or the ability, to ship to China. Peabody Energy ( BTU ), the largest U.S. coal producer as measured by sales, may not be getting credit for its expansion into Australia , where it now operates in eight mines. Peabody stock is down 31% in the past 12 months through Tuesday, albeit a better performance than two of its U.S. coal peers. But Peabody shares are trading with a steep valuation, and analysts are projecting a big drop in Peabody earnings in 2013.