Ground Breakers: Coal hits new record of US$400/t, futures rise US$140 in a single day
Sitting and watching the world burn has never been so profitable for coal miners, who are in for a bonanza as Newcastle coal prices hit a new record of US$400/t and futures rose US$140/t in a single day.
ICE Newcastle thermal coal futures for April are now fetching US$446.00/t, up US$140.55 from yesterday.
They were going for less than US$200/t a little under a fortnight ago and have put on a massive 62% in three days this month.
Russia’s war with Ukraine appears to be the driving factor.
Consumers in western aligned economies in Asia like Japan and Korea are already making inquiries about turning away from Russian imports if sanctions come into force.
Even Chinese companies are nervous about Russian cargoes, with Russian banks’ removal from the SWIFT bank communication system causing havoc because buyers pay and are financed in US dollars.
Australian coal miners are already the beneficiaries of ultra tight supply chains, weather related supply disruptions and a recent Indonesian export ban.
$6.2 billion capped Yancoal (ASX:YAL), which announced a stunning $791 million profit and $930 million unfranked dividend this week, was up over 10% to a record high of $4.72 this morning.
The world’s biggest miner BHP (ASX:BHP), which mines metallurgical coal in Queensland and thermal coal at its up for sale Mt Arthur mine in New South Wales, was up 3.19% with iron ore prices also higher.
Met coal prices soared on Russian disruptions as well, with Fastmarkets saying Australia premium hard coking coal was up almost US$20/t to a new record of US$476.48/t.
Stanmore Coal (ASX:SMR) picked a good time to head to the market to raise the US$506m equity portion of its US$1.2b deal to buy BHP’s BMC operations in Queensland, expected to be backed with a US$300 million commitment from its majority owner, Indonesia’s Golden Energy and Resources.
The firm entered a trading halt to prepare the raising today.
Other commodities with large Russian suppliers also surged, with aluminium hitting a new high, up 2.6% to US$3569/t and nickel up 3.1% to US$25,879/t.
ANZ’s John Bromhead said Danish shipping giant Maersk, which handles shipments of Russian aluminium giant Rusal, has suspended its services in Russia.
“Large volumes of aluminium and nickel regularly flow from St Petersburg to European ports and are at threat of disruption,” Bromhead said in a note this morning.
“Meanwhile, Chinese officials have ordered companies to prioritise energy and metals supply security, sparked by concerns over disruptions.
“Russia makes up 18% of China’s imports of nickel, and 12% of its aluminium shipments.”
The materials sector was up 2.61% this morning with energy stocks up 3.41% led by a 3.65% gain for oil producer Woodside (ASX:WPL).