Ground Breakers: Gold, aluminium, coal rip higher as war dominates commodities market
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Coal companies stormed out of the gates this morning as prices for Newcastle coal sprinted beyond US$300/t to new records on war fears.
Chatter has emerged that Japanese and Korean customers were looking to shift away from Russian sources of coal if sanctions are placed on Russian energy resources in response to the invasion of Ukraine.
There is more to come.
Bloomberg reported yesterday even China, long thought to be friendly to Russia due to the close ties and anti-western sentiment recently built between Vladimir Putin and Xi Jinping could begin turning away from Russian coal providers.
“Chinese power plants and steelmakers are looking for alternatives to Russian coal after some domestic banks suggested they avoid purchases due to the mounting sanctions being imposed on Moscow,” they said.
“At least two of China’s largest state-owned banks are limiting financing for Russian commodities.”
That comes on top of massive rainfall and flooding on Australia’s east coast. While major ports have not been impacted yet, any delays to coal exports could cause even further tightness in a highly strung market.
Gold stocks were also in favour, with dual listed AngloGold Ashanti (ASX:AGG) up 7.58% to lead the large cap market as gold prices climbed 1.35% to US$1935/oz this morning.
Iron ore miners Rio Tinto (ASX:RIO) and Fortescue (ASX:FMG) were also up big as iron ore prices rallied 4% to US$143/t overnight, reversing a fortnight of malaise brought about by Chinese interventions in market prices.
China’s PMI indexes were up for February, suggesting bank rate cuts were boosting industrial demand, with a major Ukrainian supplier of high grade pellets, Ferrexpo, also calling Force Majeure in recent days.
Aluminium prices climbed to record highs also around US$3500/t. Russian giant Rusal could be the subject of sanctions similar to those levied in 2018, while it also suspended the 1.75Mtpa Nikolaev alumina refinery in Ukraine. Alumina Ltd (ASX:AWC) stocks were higher.
The materials sector was up a big 2.56% this morning with energy stocks up 3.57%.