A few days ago, I wrote about Indonesia’s booming thermal coal export business. It’s the largest exporter of thermal coal in the world, and business is booming, primarily due to demand from India and China.
It turns out the coal export business is just as good for another country, half a world away from Indonesia. I’m talking about the good ol’ U.S.A.
That’s right, coal exports are booming here, too. As you can see from the graph below, published by the EIA, coal export shipments are now at levels not seen in nearly two decades.
This past year, they’ve been on an absolute tear, up 49 percent for the first quarter of 2011 compared to a year ago. The two-year statistics are just as good: The 26.6 million short tons exported in the first quarter were double the amount shipped in the same quarter of 2009.
Coking or metallurgical coal makes up 64 percent of U.S. exports. But that’s rapidly changing. Like Indonesia, the United States has experienced a tremendous increase in thermal or steam coal.
As you can see from the EIA graph below, in the first quarter of 2011 steam coal exports were up a whopping 160 percent compared to 2010. Coking coal was up a respectable 21 percent for the same period.
What’s going on here? As I’ve said countless times, with commodities, it’s all about supply and demand. In the case of coal, this year’s gains in the United States and elsewhere have come largely at the expense of Australia.
Flooding and typhoons that occurred between last November and this February shut down most of the coal mines in Queensland. The multiple disasters also disrupted rail service and damaged seaport coal-handling facilities.
That translated into an estimated that 30 million ton export shortfall from down under, and that was just from the first quarter. Dewatering the mines, repairing the railroads and the port facilities is ongoing.
Golden opportunity for two big U.S. coal producers
Full mine production isn’t expected to resume until sometime in the third quarter of 2011. That means U.S. coal producers are stepping in to fill the gap. This is happening in the face of increasing coal demand from China and India. They’ll be burning coal for the next 100 years, and they can’t get enough of it.
As a result, U.S. producers can ship all they can mine. That’s been a boon to U.S. steam coal producer Arch Coal, Inc. (NYSE: ACI, Stock Forum).
Here’s why I like Arch: The location of its mines and its easy access to port loading facilities give it a big advantage over some of its domestic competitors. It ships coal domestically and to customers on four continents globally.
Alpha Natural Resources, Inc. (NYSE: ANR, Stock Forum) is another big U.S. coal producer that’s substantially ramped up its production and exports in response to Australia’s woes. Why do I like it? Simple: It has more export terminal capacity than any other U.S. producer.
It also happens to be the nation’s leading exporter of metallurgical coal, and the number three supplier in the world.
If you want to be invested in commodities, and you can get past the environmental guilt, you should definitely consider both of the above suppliers, particularly for the balance of 2011.