William Shakespeare expertly inserted a play into his play in Hamlet, permitting layers of drama to unfold onstage in unison.

While a coal company can hardly be expected to rival Shakespeare's eloquence, Peabody Energy (NYSE:BTU) has spun layers of insight into the company's first-quarter earnings release. Offering more than mere performance reports, select industrial bellwethers like Peabody Energy, Joy Global (NASDAQ:JOYG), and POSCO (NYSE:PKX) provide crucial glimpses of emerging trends that permit their audience to unlock the mysteries of this financial tragedy.

The play
Wall Street, too, has an undeniable flair for drama. Peabody's earnings and additional production cuts displeased the analysts, so the market promptly removed 9% of the company's value upon the market opening Wednesday. A 200% increase in earnings provided no appeasement, nor did the doubling of cash flow to $220 million atop a 15% rise in revenue.

The additional production cuts are both modest in scale and entirely prudent. For context, consider that Peabody shares are now languishing more than 70% below their peak 2008 levels, while benchmark prices for both thermal and metallurgical coal are poised for settlement at levels above the historical mean. Following earnings growth rates in recent quarters between 700% and 1,000%, I can understand why analysts aimed high with projections for Peabody's earnings, but I believe that Fools and analysts alike need to sit through the play once more to decide whether the sell-off was warranted.

The play within the play
The dichotomy of coal demand shaping up between Asia and the U.S. continues to gather steam, and corroborating evidence for this predicted trend is Peabody's play within the play. Among steelmakers, we find scrappy stalwarts like Nucor (NYSE:NUE) and U.S. Steel (NYSE:X) epitomizing a domestic industry that's operating at just 40-45% of capacity. Meanwhile, Peabody reports that China's steel production is currently outpacing 2008 levels. While shared weakness in Europe is cutting sharply into the seaborne trade of U.S. Appalachian coal from miners like Massey (NYSE:MEE), Peabody expects China to become a net importer of coal during 2009. India, furthermore, could triple thermal coal imports over the next four years to more than 100 million tons, while U.S. demand could dwindle by 90 million tons in 2009 alone.

With a foot in China's door, and spare domestic capacity awaiting the long-term impacts of underinvestment in future supply, Peabody Energy is far more stable than Hamlet ever was.

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