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Mon Mar 19, 2018, 04:19 PM

'Unintended consequences': Tariffs may boost US coal use but threaten exports EXCLUSIVE

Retweeted by Joshua Learn: https://twitter.com/LearnOnCoal

ICYMI: Trump tariffs might break up the party for those who've recently found success exporting met coal: https://platform.mi.spglobal.com/web/client?auth=inherit#news/article?id=43835957&cdid=A-43835957-10538


'Unintended consequences': Tariffs may boost US coal use but threaten exports EXCLUSIVE

Monday, 12 March 2018 11:26 AM ET

By Joshua Learn and Taylor Kuykendall

New steel and aluminum tariffs may benefit U.S. coal producers' domestic sales, but the move also threatens a recent improvement in overseas demand for metallurgical coal.

President Donald Trump's March 8 order enacts a 25% tariff on steel imports and a 10% tariff on aluminum imports. The administration granted temporary exemptions to Mexico and Canada pending further North American Free Trade Agreement talks and left the door open to negotiating exemptions for other countries.

Tariffs on imported steel are "clearly positive" for producers like Arch Coal Inc. and Ramaco Resources Inc., wrote Jeremy Sussman, head of U.S. equity research for metals and mining at Clarksons Platou Securities. If the tariffs get the U.S. steel industry back up to 80% capacity utilization as intended, Sussman said that could mean a "double-digit percentage" increase in demand for metallurgical coal. Two blast furnaces alone, he points out, could increase domestic demand by up to 3.5 million tonnes per year.

Ramaco Resources Executive Chairman and Director Randall Atkins warned that "the law of unintended consequences will be alive and well" as it is with most government interventions in markets. ... "The question would also be how much of a shortfall would occur on exported coal to foreign steel groups forced to cut back production headed to the U.S.," Atkins told S&P Global Market Intelligence. "That is a wild card given that in many cases they are also supplying steel to a strengthening home market in Europe, etc."

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