Making a comeback

Poland isn’t the only country that’s using coal.

According to the International Energy Agency, coal consumption is set to increase globally.

“Based on current economic and market trends, global coal consumption is forecast to rise by 0.7% in 2022 to 8 billion tonnes, assuming the Chinese economy recovers as expected in the second half of the year,” the IEA says in a recent report.

“This global total would match the annual record set in 2013, and coal demand is likely to increase further next year to a new all-time high.”

The IEA notes that as the world economy bounced back from the COVID-19 pandemic, global coal consumption already rebounded by roughly 6% in 2021.

Analysts point out that the supply and demand dynamics for coal could lead to its glorious revival.

“Looking at the year ahead through the northern winter with gas prices in Europe and gas supply availability, countries are turning back to coal,” Shaw and Partners senior analyst Peter O’Connor tells CNBC.

“And supply [of coal] is tight. Why? Because nobody’s building capacity and markets will remain tight given the weather and COVID. So that market will stay higher for longer, probably well into the 2023 calendar year.”

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Time to revisit coal stocks again?

To be sure, coal is no longer making headlines in the investing world. In fact, the only coal-focused ETF — the VanEck Vectors Coal ETF (KOL) — ceased trading in December 2020.

But the industry is far from dead.

Alliance Resource Partners (ARLP), a diversified producer and marketer of steam coal to major U.S. utilities and industrial users, recently raised its cash distribution to investors by 14%.

The stock is also up 100% year to date, in stark contrast to the broad market’s double-digit decline.

Another example is Peabody Energy (BTU), a coal producer headquartered in St. Louis. The company’s products are essential for electricity generation and steelmaking. Its shares are up 134% in 2022.

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About the Author

Jing Pan

Jing Pan

Investment Reporter

Jing is an investment reporter for MoneyWise. Prior to joining the team, he was a research analyst and editor at one of the leading financial publishing companies in North America. An avid advocate of investing for passive income, he wrote a monthly dividend stock newsletter for the better half of the past decade. Jing holds a Master’s Degree in Economics and an Honours Bachelor of Science Degree, both from the University of Toronto.

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