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So What Kind of Coal is China Hot?

Thursday, 12 Apr 2012 | 2:15 PM ET

The companies that mine the coal used for steel production are getting a big boost from China, while those mining coal for energy are having the same problem as natural-gas drillers — very low prices.

Thermal coal prices have "pretty much bottomed out" while coking coal is "driven by China," CLSA analyst David Lipschitz told CNBC Thursday. Coking coal is used in making steel while thermal, or steam, coal is used in power generation.

Lipschitz sees production cuts coming on the thermal side because of the low prices, and that means "you'll see prices stabilize." At the same time he sees coking coal prices, which dropped from over $300 a ton to the current $210 a ton, coming back up, and any company on the coking side will be a good investment.

Time for Coal to Rebound?
Coal stocks are feeling pressure as power stations switch to cheaper natural gas. David Lipschitz, Metals & Mining analyst, weighs in on whether the worst could be over for coal stocks.

One of his top picks is Alpha Natural Resources , which bought Massey Energy. After being criticized for perhaps paying too much for Massey, Lipschitz believes the stock still has room to go up.

"This is one of the top names in the space because even though they’re not going to do well this year, they’re going to have to cut more production," he said. "They’re still going to generate some free cash" because capital expenditures have been cut back.

He also thinks it's a good opportunity to buy shares of Walter Energy at current levels. Consol Energy is another of his picks.

Another Take: What's going on with coal stocks?______________________________________________________
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Trader disclosure: On Apr 11, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU; Patty Edwards is long for clients YUM; Patty Edwards is long for clients MCD; Patty Edwards is long for clients SBUX; Patty Edwards is long for clients PM; Patty Edwards is long for clients SNPS; Patty Edwards is long for clients INTC; Patty Edwards is long for clients MSFT; Patty Edwards is long for clients QCOM; Patty Edwards is long for clients BKCC; Patty Edwards is long for clients SYT; Patty Edwards is long for clients GLD; Patty Edwards is long for clients AAPL; Patty Edwards is long for clients WLT; Patty Edwards is long for clients ANR; Patty Edwards is long for clients T; Patty Edwards is long for clients HSY

For David Konrad
KBW expects to receive or intends to seek compensation for investment banking services from Citigroup in the next three months: C
KBW currently makes a market and/or acts as a liquidity provider in Citigroup securities: C
KBW expects to receive or intends to seek compensation for investment banking services from Commerce Bancshares Inc in the next three months: CBSH
KBW currently makes a market and/or acts as a liquidity provider in Commerce Bancshares Inc securities: CBSH
KBW expects to receive or intends to seek compensation for investment banking services from Fifth Third Bancorp in the next three months: FITB
KBW has received compensation for investment banking services from Fifth Third Bancorp in the past 12 months: FITB
KBW currently makes a market and/or acts as a liquidity provider in Fifth Third Bancorp securities: FITB
Fifth Third Bancorp currently is, or was during the 12-month period preceding the date of distribution of this report, a client of KBW: FITB
KBW expects to receive or intends to seek compensation for investment banking services from Goldman Sachs Group, Inc. in the next three months: GS
KBW has received compensation for investment banking services from Goldman Sachs Group, Inc. in the past 12 months: GS
KBW currently makes a market and/or acts as a liquidity provider in Goldman Sachs Group, Inc. securities: GS
Goldman Sachs Group, Inc. currently is, or was during the 12-month period preceding the date of distribution of this report, a client of GS
KBW expects to receive or intends to seek compensation for investment banking services from JPMorgan Chase & Co in the next three months: JPM
KBW currently makes a market and/or acts as a liquidity provider in JPMorgan Chase & Co securities: JPM
KBW expects to receive or intends to seek compensation for investment banking services from Morgan Stanley in the next three months: MS
KBW currently makes a market and/or acts as a liquidity provider in Morgan Stanley securities: MS
KBW expects to receive or intends to seek compensation for investment banking services from U.S. Bancorp in the next three months: USB
KBW currently makes a market and/or acts as a liquidity provider in U.S. Bancorp securities: USB

For David Lipschitz
CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Alpha Natural Resources for non-investment banking products/services in the past 12 months: ANR
CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) managed or co-managed a public offering of Arch Coal's securities in the past 12 months: ACI
CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) participated in a public offering of Arch Coal's securities or received compensation for investment banking services from Arch Coal in the past 12 months: ACI
CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Arch Coal for non-investment banking products/services in the past 12 months: ACI
CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) managed or co-managed a public offering of Consol Energy's securities in the past 12 months: CNX
CLSA and/or Credit Agricole Securities (USA) (and/or their respective affiliates) participated in a public offering of Consol Energy's securities or received compensation for investment banking services from Consol Energy in the past 12 months: CNX
CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Consol Energy for non-investment banking products/services in the past 12 months: CNX
CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Peabody Energy for non-investment banking products/services in the past 12 months: BTU
CLSA and/or Credit Agricole Securities (USA) Inc and/or the analysts involved in the preparation of this report have reason to know that an affiliate of Credit Agricole Securities (USA) Inc and/or CLSA received compensation from Walter Energy for non-investment banking products/services in the past 12 months: WLT

For Kubinder Garcha
Credit Suisse makes a market in LXK
Credit Suisse makes a market in MSI
Credit Suisse makes a market in MMI
Credit Suisse makes a market in FIO
Credit Suisse makes a market in CELL
Credit Suisse makes a market in NTAP
Credit Suisse makes a market in RIMM
Credit Suisse makes a market in NOK
Credit Suisse makes a market in ERIC
Credit Suisse makes a market in AAPL
Credit Suisse makes a market in DELL
Credit Suisse makes a market in EMC
Credit Suisse makes a market in HPQ
Credit Suisse makes a market in IBM
Credit Suisse makes a market in ALU
Credit Suisse makes a market in QCOM

For Ken Sena
Nothing to disclose



CNBC.com with wires.

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