The economic recovery from COVID-19 has placed greater emphasis on coal due to rising energy needs. The demand for energy is expected to hit an all-time high next year. Furthermore, Senator Joe Manchin’s thumbs down on President Biden’s Build Back Better bill proposal is expected to benefit coal producers. Given this backdrop, we think coal stocks China Shenhua (CSUAY), SunCoke (SXC), and Hallador (HNRG) could be solid bets this winter.Rapid economic recovery from the COVID-19 crisis has caused coal to rise again in prominence as a resource to meet the country’s energy needs. Currently, the amount of electricity generated from coal is set to post a record this year. According to the International Energy Agency (IEA), global power generation from coal is expected to surge 9% in 2021 to 10,350 terawatt-hours, which is an all-time high, while coal demand is predicted to hit record highs in 2022 despite the drive for cleaner energy. Moreover, the sky-high natural gas prices have given coal a cost-competitive advantage.
In addition Democratic Senator Joe Manchin from West Virginia has said no to the Biden administration’s proposed Build Back Better bill, which contains $555 billion spending to shift the country toward renewable energy sources. Manchin’s negative position is aligned with his state’s coal interests. Gregory Wetstone, President and Chief Executive of the American Council on Renewable Energy, said, “All of the prior conversations had been along the lines that he did not want to penalize fossil fuel.”
Coal prices are at $149 per ton, up 121.2% this year. Therefore, we think coal stocks with sound fundamentals, China Shenhua Energy Company Limited (CSUAY), SunCoke Energy, Inc. (SXC), and Hallador Energy Company (NASDAQ:HNRG), might be ideal additions to one’s portfolio this winter.