Energy Prospectus

Notes below are from HFI Research:

Coal producers offer investors a way to profit from the U.S. natural gas bull market that began late last year.

Coal prices could gain support from increased domestic demand that occurs as natural gas prices rise. Higher natural gas prices make coal relatively more attractive as an energy source for power generation. Electric utilities become incentivized to switch to coal, increasing demand and prices. Coal stocks could benefit from the resulting uplift in coal producer cash flow.

We expect the natural gas bull market to continue through the end of the decade, so domestic coal prices may also get a longer-term boost.

These dynamics appear to paint a bullish picture for natural gas demand that comes on top of the widely-publicized LNG export buildout and data center expansion. They could deliver an added boost to coal prices and coal stocks.

"From a purely domestic supply and demand standpoint, the stars appear to be aligned in a bullish manner for coal prices."

EIA forecasts a 5% increase in coal consumption in 2025 in its Short-Term Energy Outlook (STEO).

Increasing coal demand is set to arrive as U.S. coal supply is in long-term decline. Less-efficient coal plants have been retired, and natural gas has been the primary energy source substitute. The trend is expected to continue to decline for at least several years.

In its STEO, the EIA expects coal production to decline by 6% in 2025.
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Coal doesn't have as much control over natural gas prices as there used to be because the U.S. has a lot fewer coal fired power plants. This is another reason that I believe U.S. (and eventually Canadian) natural gas prices will be setting a much higher price range. The "Right" long-term price for U.S. natural gas is 1/10th the price of oil.
Natural gas prices in Asia and Europe are ~$14/MMBTU