ANGHI/iStock via Getty Images

ANGHI/iStock via Getty Images

Last November, the President of COP26 stated his goal for the summit was to "consign coal to history," and given recent volatility, it's worth checking in on progress. Prices, at least for now, appear to indicate the out-of-favor fuel is as popular as ever. With both thermal (power) and metallurgic (steel) coal prices at all time highs. And not by a little, thermal and met coal prices are up ~2-3x from pre-pandemic levels.

With primary energy demand growing, and Western leaders from California to the UK and Germany shutting nuclear plants (NYSEARCA:URA) (NYSE:CCJ) , prices for all forms of energy have risen since COP26. In an attempt to offset lower nuclear supplies, and meet growing demand, China maxed out coal production, the US released part of its strategic reserves, and Europeans drew heavily on natural gas inventories. Yet prices for coal, oil (NYSEARCA:USO) and natural gas (NYSEARCA:BOIL) all sit at multi-year or all-time highs. This reality has resulted in an about face from the IEA, which produced a comprehensive coal report in December calling for sustained coal demand growth through 2025.

With the world finding itself short energy, it's never been more profitable to be a coal miner. And yet the stocks look cheaper than ever. Peabody (NYSE:BTU) is down 70% from 2019 highs and trades at 3.0x 2022 consensus earnings. Consol (NYSE:CEIX) too trades well below 2019 highs, and at only 4.0x 2022 earnings. On the met coal side, Warrior (NYSE:HCC) has broken to new highs but still trades on 5x 2022 earnings. Arch (NYSE:ARCH) , Alliance (NASDAQ:ARLP) , Alpha (NYSE:AMR) all trade at near trough multiples.

Valuations suggests 2022 will be the peak earnings year for the sector, with bad times returning in 2023+. With Europe recently including nuclear and natural gas in the Continent's "sustainable energy taxonomy", perhaps supplies of cleaner fuels will in fact crowd out coal in coming years. However, for now, it appears that the IEA is right in their call for sustained demand growth.