Peabody’s Coal Sales Volume And 2022 Outlook

Piles Of Coal. Image source: Flickr Image.

Coal may be dying due to the pollution that it causes and the shift of the world’s energy usage toward renewable energy.

But coal stocks are definitely not dying and are coming back, and probably at a much stronger cycle than the prior one.

Look at the stock price of Peabody Energy (NYSE:BTU), one of the biggest coal miners in the U.S. in the snapshot below.

BTU historical stock price. Source: StockCharts.com

It has been shooting through the roof lately and reached as much as $27 USD per share as of Dec 2022.

As of Dec 2022, BTU is a $4 billion company, making it the largest coal miner in the U.S. by market capitalization.

Since 2021, BTU has rallied by nearly 10,000%, going from a penny stock to $27 USD per share now.

BTU’s rally in the last 3 years has put some of the growth stocks such as Tesla to shame.

Prior to 2021, Peabody was nearly on the brink of bankruptcy.

After 3 years, the company has not only survived but is thriving.

So what has been going on?

In this article, we are going to examine Peabody Energy’s coal shipment volumes and the guided 2022 outlook.

Let’s get down to work.

Breakdown Of Peabody’s Coal Shipment Volume

For your information, Peabody’s coal shipment volume is divided into the U.S. and seaborne segments.

Seaborne coal means that the coal is mined and shipped outside of the United States to countries that need to import energy.

Aside from the breakdown by region or by country, BTU’s coal also is divided by category or by type.

In this case, Peabody mines and ships 2 categories or types of coal, namely thermal and metallurgical coal.

Thermal coal is used primarily for power generation and therefore is sold to utility companies.

In contrast, metallurgical coal or coking coal is used for steelmaking and therefore is sold primarily to steelmaking companies.

All said, let’s proceed to look at the shipment numbers below.

Peabody’s U.S. Thermal Coal Shipment Volumes By Year

Peabody’s U.S. thermal coal shipment volumes by year

Let’s first look at Peabody’s U.S. coal shipment volumes by year as shown in the chart above.

For your information, Peabody’s biggest coal shipment volumes come from the U.S. in the Powder River Basin located between Montana and Wyoming.

The majority of the coal extracted from the Powder River Basin region is of the thermal type which is usually used for electricity generation purposes.

All told, Peabody’s U.S. thermal coal shipment volumes reached 105.3 million tons as of fiscal 2021 and are projected to decline slightly to 103 million tons in fiscal 2022, according to the company.

Over the last 5 years, Peabody’s U.S. thermal coal shipment volumes have been on a decline and the fiscal 2021 figure was the lowest the company has ever reported.

The lower thermal coal volume sold in 2021 was primarily driven by the COVID-19 pandemic and the lower thermal coal consumption as the world transitions toward renewable energy.

While Peabody’s U.S. coal shipment volumes declined more than 20% in 2020, the 2021 figure was roughly in line with that of 2020, indicating that thermal coal shipment may have stabilized.

The same trend applies to the thermal coal shipment volume for 2022.

BTU guided for roughly 103 million tons of thermal coal for 2022, down only slightly from 2021.

Peabody’s Seaborne Coal Shipment Volumes By Year

Peabody’s seaborne coal shipment volumes by year

Seaborne coal shipment volumes represent overseas mining operations such as that in Australia.

Peabody’s biggest overseas mining operation is located in Wilpinjong, New South Wales, Australia, an area of the size of 5,500 football fields.

According to the chart above, Peabody’s seaborne mining operations are divided into 2 segments, namely thermal and metallurgical.

Metallurgical coal is used for steelmaking and therefore, is primarily sold to steel-making companies whereas thermal coal is sold primarily to utility companies for electricity generation purposes.

That said, according to the chart, both Peabody’s seaborne thermal and met coal mining operations have been on a decline over the last 5 years.

As of fiscal 2021, Peabody’s seaborne metallurgical coal shipment volumes have declined the most and reached only 5.5 million tons, half of what the company sold in FY2017.

Going forward, Peabody guided for 6.6 million tons of seaborne metallurgical coal shipment volumes for fiscal 2022, representing a rise of roughly 20% year-on-year.

As seen from the chart, BTU’s seaborne metallurgical coal shipment may have bottomed in 2021 and is on the course of reversing.

On the other hand, Peabody’s seaborne thermal coal shipment volumes have continued to trend lower.

As of 2021, BTU shipped only 17.3 million tons of seaborne thermal coal, down 9% from a year ago.

Going into 2022, the company guided a much lower seaborne thermal coal shipment volume, only at 15.8 million tons, down 9% year-on-year.

It looks like thermal coal shipment volume will continue to slide while metallurgical coal will trend higher.

Peabody’s U.S. Thermal Coal Shipment Volumes (Quarterly)

Peabody’s U.S. thermal coal shipment volumes by quarter

On a quarterly basis, Peabody’s U.S. thermal coal shipment has remained flat between fiscal 2020 and 2022.

In fiscal 2022 3Q alone, Peabody shipped 27.1 million tons of thermal coal in the U.S., about the same as that of the same quarter a year ago.

While U.S. thermal coal shipment volume has been flat year over year, it grew 18% sequentially in Q3 2022.

Peabody’s U.S. Thermal Coal Shipment Volumes (TTM)

Peabody’s TTM U.S. thermal coal shipment volumes

The TTM plot above clearly demonstrates the decline of Peabody’s U.S. thermal coal shipment volume in the last 3 years.

While U.S. thermal coal shipment volume has gone down significantly, it has not been the case since 2021.

As seen, Peabody’s U.S. thermal coal shipment volumes have been roughly flat on a TTM basis between 2021 and 2022.

As of Q3 2022, Peabody’s U.S. thermal coal shipment volumes totaled 101.9 million tons, roughly 3% lower than the same quarter a year ago.

Peabody’s Seaborne Coal Shipment Volumes (Quarterly)

Peabody’s seaborne coal shipment volumes by quarter

In terms of seaborne coal shipment volumes, Peabody shipped 3.7 million tons and 1.8 million tons of thermal coal and met coal, respectively, in 3Q 2022.

While seaborne thermal coal has been on a decline, metallurgical coal shipment volume seems to be heading the opposite.

In Q3 2022, BTU’s seaborne thermal coal shipment volume was down 18% year-on-year while seaborne metallurgical coal shipment volume was up a massive 20% year-on-year.

Peabody’s Seaborne Coal Shipment Volumes (TTM)

Peabody’s TTM seaborne coal shipment volumes

On a TTM basis, Peabody sold only 16.1 million tons of seaborne thermal coal as of 3Q 2022, a record low for the company in the last 3 years and was down 10% year-over-year.

On the flipped side, Peabody’s seaborne metallurgical coal shipment has risen significantly in fiscal 3Q 2022 compared to the prior quarter to 6.2 million tons on a TTM basis, a record high since 2021.

Year over year, BTU’s seaborne metallurgical coal shipment grew 17% on a TTM basis, a record growth rate ever reported.

While seaborne thermal coal has continued to decline in terms of volume sold, seaborne met coal has trended higher, suggesting that a turnaround has been occurring.

Conclusion

In short, Peabody’s U.S. and seaborne coal shipment volumes have been on a decline while metallurgical coal shipment volume has been on a rise between 2020 and 2022.

While the pandemic disruption may have significantly subsided in fiscal 2021, Peabody has guided for lower coal shipment volumes going into fiscal 2022 for both the U.S. thermal and seaborne coal shipments.

By the end of 2022, Peabody expects to ship slightly lower U.S. and seaborne thermal coal while expecting a rise in metallurgical coal shipment volume.

All in all, Peabody will ship significantly less coal in 2022 on a cumulative basis.

Therefore, BTU’s stock rally seems to be disconnected from the coal shipment volumes as both have been going in the opposite direction.

Let’s check out some other coal metrics discussed in other articles.

References and Credits

1. All financial figures in this article were obtained and referenced from Peabody’s quarterly and annual reports available in Peabody Investor Center.

2. Featured images in this article are used under creative commons license and sourced from the following websites: burning coals and Piles of Coal.

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Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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