What sent ASX mining shares flaming higher in March?

Take a look…

| More on:
A graph ablaze with fire going up, indicating a fired up and surged share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX mining shares have surged hard in 2022 and are now a leading sector in the Australian secondaries 
  • Geopolitical tensions and hot-running commodity markets continue to drive inflows into ASX mining and resource shares in 2022 
  • The upside could continue well into 2022, analysts say 

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).

TradingView Chart

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.

TradingView Chart

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

a happy group of workers around a table raise their arms in the air as though celebrating a work achievement. One woman is on her feet with her arm raised in the air in a fist pumping action.
Share Gainers

Why 5E Advanced Materials, IAG, Magnis, and Woodside shares are pushing higher

These ASX shares are ending the week strongly...

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Here’s why the 5E Advanced Materials share price just rocketed 20%

Why is this materials share lifting today?

Read more »

A woman is excited as she reads the latest rumour on her phone.
Resources Shares

Obscure ASX mining share surges 29% following OZ Minerals copper deal update

Shareholders are set to vote on the proposal later this month.

Read more »

A man holding cup of coffee puts his thumb up and smiles while at laptop.
Share Gainers

IAG share price lifts despite mixed FY22 earnings results

The ASX financial share has caught a bid in morning trading.

Read more »

Happy miner with his arms folded.
Share Gainers

Up 52% since June, can the Pilbara Minerals share price extend gains?

Things are looking up for Pilbara Minerals shares right now

Read more »

jump in asx share price represented by man leaping up from one wooden pillar to the next
Share Gainers

Why has the De Grey share price leapt 36% in a month?

Investors have been sizing in since July.

Read more »

A smiling woman in a hat holding a ticket takes selfie inside a Qantas plane next to the window.
Share Gainers

Why did the Qantas share price fly higher today?

Increased demand for travel and cheaper oil prices are helping to propel this ASX airline share higher.

Read more »

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why Block, Lake, Mirvac, and QBE shares are racing higher

These ASX shares are having strong days...

Read more »