Australian coal on a tear as decoupling from Russia continues

Company News

by Melissa Darmawan

As countries decouple themselves from Russia, the price of coal has reset record highs as major importers turn to Australia for their shipments. 

Benchmark prices for high-grade Australian coal traded through the Newcastle port continues to climb. Brussels overnight provided its tick of approval for the EU to burn more coal over the next decade, a move that further supports the price boost of coal.

Countries like Japan unveiled its ban on Russian coal in April. While South Korea has stopped Russian coal imports in recent months. It wouldn’t be surprising if other countries mirror this move and scramble to find new sources.

China is Russia’s biggest customer when it comes to buying coal, followed by Japan and South Korea combined.

Elsewhere, India's favourite coal importers are from Australia and Indonesia, accounting for over 70 per cent of overall coal imports.

All this shows the popularity of Australian coal.

One interesting point is that Indonesian coal is of a lower grade and could be losing price competitiveness against Australian coal, after hitting a decade-high level last year, giving more opportunities to Australian miners including Whitehaven Coal (ASX:WHC), Yancoal Australia (ASX:YAN) and Terracom (ASX:TER).

Amid this structural shift, Whitehaven Coal (ASX:WHC) is now debt free, Yancoal (ASX:YAN) reinstated its dividend after strong cash earnings while Terracom (ASX:TER) paid a lump sum of debt, boding well for a future dividend payment.

Shares in Whitehaven Coal (ASX:WHC) year to date is up 88 per cent to $5.18, shares in Yancoal (ASX:YAN) skyrocketed year to date by 101 per cent to $5.65 while Terracom (ASX:TER) shares has soared 205 per cent to 61 cents.

Sources: Bloomberg, Trading Economics

 

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