Arrakis Global
Global Thematic Fund Manager
Thermal coal demand keeps surprising to the upside, supporting Glencore, Core Natural Resources, Whitehaven Coal and Yancoal Australia. Per a chart of IEA forecasts, global coal demand is running about 1 billion tonnes, roughly 9%, above what the agency expected only five years ago, a miss equal to the combined annual demand of the EU, Japan and the US. x.com x.comÂ
Thermal coal looks set to re-rate higher with a permanent floor, as massive restocking in Asia and economies' need to build energy redundancy support demand. Yancoal, Whitehaven, New Hope and Stanmore rose 3-6% in a day as thermal coal wakes up, with Glencore and Core Natural Resources also in play. For long-time coal followers this is the opportunity: thermal coal returns come like ketchup out of a bottle, all at once. x.com x.comÂ
Coal stocks are setting up for several quarters of upside as a new cycle gets under way. After a deep pullback the group is due at least a 40-week cycle low and is within the timing of an 18-month low; April 2025 was likely the 4-year low. CONSOL, Whitehaven and Warrior Met have broken downtrends, and Peabody and others should follow; confirmation needs a downtrend break and a higher weekly low. The aftermath of the half-year Hormuz closure should also benefit thermal coal. x.comÂ
AI needs watts, not just chips, and that is reviving demand for coal producers such as Peabody, Warrior Met Coal, Alliance Resource Partners and Core Natural Resources. Coal plant retirements are being reversed across the US to keep data centers running, the DOE has over 300 requests for new data-center sites, and renewables and nuclear cannot scale fast enough. x.comÂ
Ramaco Resources offers coal and rare earth exposure in a war that is lifting both, after being beaten down from 57 to 13 with huge short interest. Coal prices are spiking and the coal sector is at all-time highs, with structural changes in energy markets, including natural gas capacity lost to strikes in Qatar and Iran, adding commodity upside. Its rare earths are needed to replenish military stockpiles spent in the conflict. x.com x.comÂ
Peabody Energy should benefit because the world needs coal, alongside natural gas and other sources, to power data centers. Coal remains one of China's main sources of energy, and the stock has built a really nice, big base. x.comÂ
