In June, G7 country leaders pledged to transition away from coal, with the goal of completely phasing it out by 2040. The commitment includes Japan, the second-largest overseas coal power financier in the world. Recently, China, the world’s largest coal producer, intervened to tame surging coal prices as part of an effort to address power shortages. As a result, last Friday, China’s thermal coal futures fell 13%, with the most-traded contract on Zhengzhou Commodity Exchange settling at 1,408.4 yuan ($220) per ton, representing a 30% decline from its record high on Tuesday and its largest weekly decline since May.
Given this backdrop, we think it could be wise to avoid fundamentally weak coal stocks of CNX Resources Corporation (CNX), Peabody Energy Corporation (BTU), Arch Resources, Inc. (ARCH), and Warrior Met Coal, Inc. (HCC).