COAL: SOLD OUT!

Not really what you’d expect from a resource that’s supposedly on the way out, is it?

“It’s pretty much sold out,” Peabody Chief Executive Officer Jim Grech said Thursday during a conference call. “We only have a small portion left to be sold for 2022 and for 2023.”

Arch’s thermal coal output for 2022 is “fully committed,” CEO Paul Lang said Tuesday, with an average price for Powder River Basin output of $16 a ton. That’s well above the $13.25 spot price last week, according to S&P Global Market Intelligence. Only a small amount of export tons remains to be sold for the second half of next year. While the company is transitioning to focus on coal for making steel, its thermal mines are helping boost cash flow and the company reinstated the dividend that was suspended last year.

Alliance Resource Partners LP, a coal miner that’s on track to ship about 32 million tons this year, has already locked in deals for 30 million tons next year and almost 16 million tons in 2023.

“Our challenge in America is most producers are all sold out,” CEO Joe Craft said during a call Monday.

It bears repeating what we said before in these missives:

The prevailing wisdom is that coal is in an existential decline, but you know what? The prevailing wisdom is not wise at all. It is, in fact, as wrong as Miley Cyrus swinging naked on a wrecking ball. Just wrong.

An argument could be made that the long-term demand for coal will decline over the next 20+ years or so, but we believe that near/medium term supply destruction will be far more dramatic than any decline in demand. This is going to be a decade for coal.

  DO AS I SAY, NOT AS I DO

Ah, those foie gras-eating, Perrier-drinking world savers…

More than 400 private jets carrying world leaders and business executives to Cop26 will blast 13,000 tonnes of CO2 into the atmosphere, the Sunday Mail can reveal.

The flights – which will produce more global warming gas than 1600 Scots burn through in a year – have been branded “rank climate hypocrisy” and the “nadir of carbon inequality”.

At least they’re using “sustainable fuel”.

On another note, often it isn’t what is said, but what remains unsaid that tells you all you need to know. In the same vein of thought, when it comes to the Glasgow circus (COP26), it isn’t who attended and what they said… but who DIDN’T attend.

Xi, Putin, Erdogan, and Bolsonaro. That is who. As we’ve said before, alliances are forming. Those who go woke will go broke and those who do not… will not.

  CHINA: GOING NUCLEAR

While the pointy shoes were busy virtue signalling in Glasgow, China decided it’s time to go nuclear:

China has over the course of the year revealed the extensive scope of its plans for nuclear, an ambition with new resonance given the global energy crisis and the calls for action coming out of the COP26 Climate Summit in Glasgow. The world’s biggest emitter, China’s planning at least 150 new reactors in the next 15 years, more than the rest of the world has built in the past 35.

Even more stunning when you consider that just 30 years ago, China produced no nuclear energy. And today, they’re talking about 4X-ing their nuclear capacity by 2035.

So one one side, you have a rapidly growing demand for uranium (and for years to come). And on the other, you have rapidly shrinking supply as existing mines are becoming depleted and no new supply is coming online anytime soon. It’s why we’re holding on to our Insider uranium positions — despite the wild run up we’ve seen recently.

  THE ARAB SPRING GOES GLOBAL

We’ve been highlighting rising food prices quite a lot lately — not only because we like food, but because shortages of food are highly highly correlated with revolutions.

Now, if you get your food delivered to you on fine china by masked servants, perhaps the costs aren’t noticed. But for the rest of folks, they are beginning to feel the heat.

When food eats up (excuse the pun) over 30% of disposable income, we’ll get social unrest. And the Fed spraying liquidity at the market will only accelerate the collapse in confidence of currency. It might take a few quarters, but it seems inevitable and inescapable at this point.

Buckle up, and prepare your portfolios.