US coal stocks boom as free cash expected to flow on higher prices – by Taylor Kuykendall and Gaurang Dholakia (SP – September 13, 2021)

U.S. coal companies’ stock prices have rallied in 2021, and producers of the bulk commodity could book significant positive free cash flow in the second half of 2021 and in 2022.

Coal demand from power producers and steelmakers has been rebounding from lows hit during the beginning of the COVID-19 pandemic, in part due to high natural gas prices and expectations of increased infrastructure spending.

In its latest short-term energy outlook, the U.S. Energy Information Administration forecast that coal’s share of electricity generation will rise from 20% in 2020 to about 24% in 2021. The agency projected coal production will increase 66 million tons to 601 million tons in the same period.

Chance to lower debt

Meanwhile, Moody’s Investors Service estimated that U.S. coal producers will create more than $1 billion in positive free cash flow in the second half of 2021 and in 2022, before dividends on a combined basis, compared to less than $100 million generated during the first half of 2021.

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