Because of cheap natural gas production, coal has struggled recently to attract the business of its biggest client base: utilities. Thankfully for coal, natural gas prices have risen from their 2012 lows, but not all basins regained competitiveness. Appalachian producers remain maligned based on the continued weakness of the metallurgical coal market and the high cost of production for thermal coal.
That leaves the Powder River Basin and the Illinois Basin left to duke it out. Both have their own advantages. The PRB is the cheapest region in which to produce and generally provides the cleanest-burning thermal coal. To counter this, the Illinois is located closer to the majority of coal-burning utilities. Many producing companies have separated themselves from the pack based on geographic production and proximity to end users.
While the industry might be suffering at the moment, there are companies that might be worth a look. For a bit more perspective from our analysts, tune in to the video below.
With the coal market in a state of flux for the last year or so, exports are becoming a much bigger part of the domestic coal landscape, and Peabody Energy has deals in place to get its cheaper coal from the Powder River and Illinois basins to India, China, and the EU. For investors looking to capitalize on a rebound in the U.S. coal market, The Motley Fool has authored a special new premium report detailing exactly why Peabody Energy is perhaps most worthy of your consideration. Don't miss out on this invaluable resource -- simply click here now to claim your copy today.