As you may have seen, the EIA cut their U.S. coal export forecast yesterday by 3.5% - down to 107Mst. As I'd mentioned just the other day in my article on U.S. coal exports - I believe this will fall again to a range between 90-100Mst. In either case, it's a sharp reduction from 2012 exports of 126Mst. This is a reflection of increasing domestic demand which bodes well for companies such as Peabody (NYSE:BTU), Alpha Natural Resources (ANR), Arch Coal (ACI), Cloud Peak (NYSE:CLD), and Natural Resource Partners (NYSE:NRP). As coal's share of U.S. energy production shifts back to the 39-41% range for 2013, those coal companies which have seen dramatic declines over the past year will continue to stabilize and recover.
Although high coal stockpiles remain a concern, a look at individual basins reveals stockpiles returning to normal for all regions except CAPP. This isn't particularly surprising and, with the EIA's increased demand forecast to 885Mst (from 825M in 2012), the stockpiles should continue to move in the right direction.
What's driving the change is no secret. Gas prices are up more than 60% from a year ago while coal prices have stayed flat. This, coupled with a relatively cold start to the year, have increased coal-fired generation by over 20% from the same period in 2012.
Disclosure: I am long CLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.