Coal Stocks Alert: Why Are BTU, ARCH, CEIX Stocks in the Spotlight Today?


U.S. coal makers are in focus today after the European Union proposed banning Russian coal imports. A number of major coal stocks saw early gains on the news, though most have eased back down.

A man holds coal in his hands over a pile of more coal
Source: Shutterstock

So, what do you need to know about coal companies today?

Well, in response to reports of violence against civilians in the Ukrainian capital of Kyiv, European Commission President Ursula von der Leyen has suggested levying a ban on coal imports from Russia. She has stated that a ban on coal would equate to roughly $4.4 billion per year. This comes in addition to other impending Russian sanctions, including oil imports.

Despite climate change concerns, coal companies are facing a sharp demand increase as fuel supplies are expected to continue dwindling. And that makes sense. Russia produced about 18% of coal exports in 2020, according to Bloomberg. Cutting the country’s exports would likely have a cascading effect across industries and supply chains worldwide.

Coal Stocks See Renewed Interest as Russian Sanctions Ramp Up

Once-forgotten coal companies have returned to the spotlight as industry experts search for potential solutions.

Coal appears to be a last ditch effort to compensate for expected fuel shortages. Unfortunately, early estimates foresee it will be nearly impossible for U.S. miners to fill the potential supply gap created in the wake of Russia’s sanctions.

From 2008 to 2020, the number of active U.S. coal mines has receded more than 60%. Additionally, current mines are already bound by long-term supply contracts, with little room to expand production.

As per Xcoal Chief Executive Ernie Thrasher, current market conditions don’t bode favorably for coal. “I don’t see any ability for the industry to expand production. It’s like looking at a sweet dessert that you just can’t reach,” Thrasher said.

While a number of American coal stocks were trending up this morning, most have receded to nearly flat on the day. Peabody (NYSE:BTU), the country’s largest coal producer, is up 1.3% at the time of writing. This comes as Consol (NYSE:CEIX) and Arch (NYSE:ARCH) are each currently down less than a percent, despite jumping as high as 12% earlier in the day.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

With degrees in economics and journalism, Shrey Dua leverages his ample experience in media and reporting to contribute well-informed articles covering everything from financial regulation and the electric vehicle industry to the housing market and monetary policy. Shrey’s articles have featured in the likes of Morning Brew, Real Clear Markets, the Downline Podcast, and more.

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