Shares of U.S. coal companies Peabody Energy (BTU) and Warrior Met Coal (HCC) fell Tuesday after China hit back at the White House for imposing 10% tariffs on Chinese exports.
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Reacting to Beijing’s targeted retaliation to the U.S. tariffs, BTU and HCC both shipped about 3% of their value in pre-market trading ahead of the open on Wall Street later. Fellow coal producers Alpha Metallurgical Resources (AMR) and Core Natural Resources (CNR) were also down in pre-market trading, each sliding by around 2%.
It follows China’s decision to slap 15% tariffs on U.S. coal and liquified natural gas (LNG) imports, while crude oil, cars and farm equipment would face a levy of 10%. The new tariffs on US exports will start on February 10th.
US Energy Information Administration data shows that China was the second-largest buyer of U.S. coal last year. China bought almost 11% of American coal exports in the first nine months of 2024, second only to India.
By contrast, LNG exports to China are relatively small, accounting for almost 3% of total natural gas exports from the U.S. in the first 11 months of 2024.
With Coal, China Hits Trump Where It Hurts
President Trump has long been a fan of coal as an energy source. Last month he doubled down on his support for the fuel, saying that it could help meet the massive need for energy from data centers. Two decades of falling electricity demand is starting to reverse due to the needs of data centers, according to a January 14th EIA report.
“Nothing can destroy coal. Not the weather, not a bomb — nothing,” Trump told the World Economic Forum in Davos, Switzerland. “And we have more coal than anybody.”
But while supporting the coal industry was a big theme of the 2016 campaign, Trump was relatively quiet on it last time. Shares in BTU rose strongly into the November election but peaked and have declined sharply since on a lack of any significant measures to boost the sector.
Nevertheless, coal miners are hopeful that under Trump, things can improve. “What we foresee is a new approach to domestic energy that reembraces energy abundance and works to remove hurdles to domestic energy production, rather than raising them,” Conor Bernstein, a spokesperson at the National Mining Association, told S&P Global Commodity Insights.
It’s thought that while data center demand might not bring new mines on stream, it can help support existing output for a while longer.
BTU is due to report earnings before the market opens on Thursday, February 6th. Analysts expect Peabody Energy to post earnings of $0.45 per share.
Is BTU a Good Stock to Buy?
Wall Street has a Strong Buy consensus rating on BTU stock, based on three analysts offering 12-month price targets within the last three months. The average BTU price target of $27.33 implies over 56% upside from current levels.
