Global coal miner stocks have more than tripled since March, outperforming the broader market by a wide margin.
Van Eck Global‘s Market Vectors Coal ETF (KOL) recently topped $34, up from $16 at the beginning of 2009 and $11 at the bottom of the March lows. The SPDR S&P 500 ETF (SPY) is up only 20% on the year.
Coal miner stocks are doing well despite the fact that the spot and futures market for coal prices has remained flat. The recovering global economy has maintained a steady demand for U.S. coal and that trend will likely continue. The CEO of Peabody Coal recently commented that coal demand in China, the Pacific Rim and India will leave the world chronically undersupplied and he expects global shipments to grow by as much as 8% a year for the next five years.
A bounce back in the U.S. economy will also support future coal demand as half the country’s energy continues to be generated by coal.
Part of the rapid rise in coal miners is due to the fact that they were starting from a low base. Coal miner stocks were hit hard in 2008 by the one-two punch of an election of an anti-coal administration and a global recession.
KOL is a global coal ETF with top holdings that include China Coal Energy, Peabody Energy and China Shenhua Energy. A competing coal ETF is the PowerShares Global Coal Portfolio (PKOL) with top holdings that include Peabody Energy, China Shenhua Energy and Cameco Corp.