In the dour first-quarter numbers it posted this past Friday, Peabody Energy gives investors some valuable and timely insight into the declining state of global coal markets.
Probably the most newsworthy aspect of Peabody ‘s report was its admission that it expects U.S. domestic coal demand to fall by 80 to 100 million tons year over year in 2015. That would be a 10 percent decline, double what was forecast by the U.S. Energy Information Agency.
With U.S. domestic coal consumption having fallen already by 18 percent from its 2007 peak through to 2014, Peabody’s numbers show that this is shaping up to be a watershed year for the U.S. coal producers. The U.S. coal industry, mind you, is second in size only to China, where domestic coal consumption was down 4.7 percent year over year in the first quarter of 2015.
Some points of note and some broader observations around Peabody’s report:
The narrative that continues to unfold around Peabody—as distilled in its own most recent financials—is a story that encompasses the global thermal coal industry as a whole.
Tim Buckley is IEEFA’s director of energy finance studies, Australasia.