Newcastle thermal coal futures for March spiked 40% on Thursday to $440 amid concerns about Russian supply.
Those prices cooled off sharply on Friday, down -16% but still more than double year-to-date.
Russia is the world’s third-largest coal exporter, behind Indonesia and Australia, according to the International Energy Agency (IEA).
Despite headlines about net zero emissions, demand for coal in Europe has only intensified.
The region went into last winter with low stocks of natural gas, used to generate electricity. Low stocks coupled with weaker domestic energy production, booming demand in Asia and maintenance issues at French nuclear plants contributed to households paying the highest electricity prices in history.
Soaring gas prices encouraged more utilities to switch to coal for electricity generation.
The European Union’s coal imports rose to 10.8m tonnes in January, up 55.8% compared to last year. Of that, Russia supplied 43.2%, according to Reuters.
Russian coal is now potentially in jeopardy, with a lot of uncertainty about how severe the disruption will be.
Australia is uniquely positioned to capture new coal demand as European customers rush to find alternatives to Russian supply.
Resources Minister Keith Pitt told The Australian that the government was “facilitating access to Australian thermal coal producers to interested parties as they seek alternative supplies from Russia”.
“Australian producers have indicated they are willing to help our friends and allies if they can.”
At the same time, China’s state planner has urged coal miners and power plants to fulfill at least 80% of signed medium-to-long-term coal contracts each month, according to Reuters.
Coal stocks have topped this week's top performing stocks, most notably:
While smaller names have also had an upbeat week, including:
See a complete list of ASX coal stocks here.
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