The ASX mining basket has outstripped its peers in 2022 and is now the leading sector this year to date.
Whilst other domains like financials have crept up in recent weeks, Australian resources players are surging to new heights as underlying markets roar.
The spillover is set to produce hefty free cash flow yields and potentially record dividends and/or buybacks for ASX miners and their shareholders, analysts say.
Compared to ASX large-caps, small-caps, and the wider market, the mining sector has given investors outsized returns in March and over the last 12 months (shown below).
What's the situation?
The S&P/ASX 300 Metals & Mining Index (ASX: XMM) has surged more than 18% this year and is now up another 6% for the previous month.
Most of the upside in March was underscored by roaring commodity markets that have continued to surpass all expectations.
Iron ore has averaged US$118 per tonne so far in 2022, down from US$140 a year prior, whereas metallurgical coal earnings have been revised up to A$65 billion in 2022, according to Bloomberg data.
Prices are expected to average $348 per tonne before levelling off to $151 in 2027, Bloomberg forecasts show.
Not only that, but LNG exports are tipped to "more than double to A$70 billion in fiscal 2022, with spot prices likely to remain high for some time", it reports.
Meanwhile, nickel prices have also shot north and are expected to fetch US$33,217 per tonne as the US opens on Monday.
Heavy bullishness on the commodity sector has resulted in global mining baskets surging to record heights in 2022.
With that, Australia is set to be a net benefactor, according to analysis from Bloomberg.
"Australia stands to gain from a surge in energy prices on prospects that the war in Europe will exacerbate global oil and gas shortages as nations shun supplies from Russia," it reported.
"Exports are expected to hit a record $425 billion in the year to June 30 2022 – revised up by 12% from the December estimate – before dropping to $381 billion in the following 12 months on account of falling prices amid waning demand growth and elevated global output," it added.
What ASX mining shares are surging?
Resource stocks have surged hard in 2022 on the back of this underlying market activity.
In the hydrocarbons space, Woodside Petroleum Limited (ASX: WPL) has spiked 50% in that time, whereas Santos Ltd (ASX: STO) is up 26%.
Iron ore giant and the world's largest mining company BHP Group Ltd (ASX: BHP) has also lunged 26% higher whereas diversified miner Rio Tinto Limited (ASX: RIO) is a 21% gainer this year.
For even more diversified products, the Betashares Australian Resources Sector ETF (ASX: QRE) has flamed another 19% this year whilst the Vaneck Australian Resources ETF (ASX: MVR) is up 18%.
Other diversified miners like South32 Ltd (ASX: S32) have spiked 31% in the new year, while gold-bug Gold Road Resources Ltd (ASX: GOR) has surged 44%. Returns for each over the past few weeks is plotted below.
