Thermal coal takes the prize today—as the commodity with the biggest disconnect between the bullish market reality and the incredibly bearish sentiment amongst investors.
Producing stocks have seen a brief rally fizzle—with companies like Peabody Energy (NYSE: BTU) down 15% over the last month.
The sell-off isn’t surprising, considering how gloomy the prevailing media reports are. A Google News search for “coal” shows headlines like “opposition to coal export plans”, “coal is the wrong fuel”, and “end coal-fired power”. No wonder investors are heading for the hills.
But a look beneath the platitudes about the end of coal reveals a completely different picture.
Coal demand is surging. And not just in stalwart consuming nations like India—coal use is growing rapidly in a number of other surprising places.
At the same time production is falling. And just last month we saw one of the first glimpses of investor optimism in the sector—from a very high-profile endorser.
Suggesting that perhaps a resurgence in the sector is at hand? Below we look at what’s happening, the upside it could mean for coal investments, and how to play it for buyers who want to position themselves in front of this swelling wave.
Surprise Demand From Japan
This month, Japan’s Federation of Electric Power Companies said the country is making a move to coal. In a big…