As global energy markets evaluate the fallout from a slew of macro-catalysts, the price of coal has (not so) quietly started to gain steam again.
After a huge spike to spot prices in March, prices eventually cooled off, testing the US$258-$260 per tonne mark to close out the month.
They have since bounced again, trading at US$281/tonne at the time of writing. That's a 196% gain for the last 12 months.
Thermal coal prices are forecast to average US$193 per tonne in 2022, more than double last year's average "as buyers scramble for supplies", according to Bloomberg.
Meanwhile, metallurgical coal projections have been revised upwards to $65 billion. Metallurgical coal is expected to fetch $348 per tonne on average in 2022. According to projections, prices aren't expected to cool to $151 until 2027.
ASX 200 coal shares are heating up
With numerous commodity baskets surging to record heights in 2022, it's important to understand what's spurring the upside.
As Bloomberg reported earlier this week:
Commodity trade is shifting rapidly due to the [Russian-Ukrainian] war. Russian commodities that would normally head to developed nations are now being eschewed by some users and may be diverted to China and India.
China and India may then have less need for non-Russian cargoes and these could be diverted to developed nations.
For Australian coal players, the scene is set for a period of record exports and cash flow to support this volume of product leaving the country.
"[Australian energy e]xports 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," according to Bloomberg analysis.
We've already seen this kind of impact in Europe after the EU proposed to ban the import of Russian commodities, including coal.
That's no small feat. Russia is Europe's top coal supplier, according to figures from the International Energy Agency. It also supplied around 18% of coal exports in 2020.
Hence, with coal supplies retreating and threats of a global coal shortage looming, the market is turning to Australia's coal inventories in order to fill the gap.
With that, ASX 200 coal shares have spiked hard in 2022, leading the wider market in gains for the year.
Shares in Whitehaven Coal Ltd (ASX: WHC) have charged 66% higher this year to date and now trade at $4.38 each at the time of writing. That's up 5.29% on the day so far.
Meanwhile, New Hope Corporation Ltd (ASX: NHC) has also climbed 65% so far in 2022. Its shares are more than 6% higher today.
The pair are joined by Yancoal Australia Ltd (ASX: YAL), which has posted a mammoth 82% gain this year to date. The company's shares are now trading at $4.77 apiece after shooting up from $2.72 in early February.
With the nation set to realise a record year of revenues from its coal trade, it is likely to be an interesting year for the players tied into the sector.
