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Australian thermal coal prices have risen to their highest since Feb. 2012 fueled by heat waves across North Asia and China buying ahead of the peak summer demand season. Thermal coal up 130% since record lows. 

Coal Ships Newcastle

Coal Ships at Newscastle loading up for Asia

Highlights

  • Newcastle coal at $115.25/t, highest since February 2012
  • Coal far outperforms competing LNG market
  • Thermal coal is the world's most used fuel for electricity generation
  • Thermal coal price up 130 per cent since its record lows
  • Newcastle coal is up 11 % since the end of 2017 outperforming its main fuel competitor, liquefied natural gas.

Prices have been rallying with Asian economic growth combined with supply constraints from mine closures and high hurdles to developing new mines with environmental concerns about pollution and global warming.

In recent weeks, a heat-wave in North Asia and restocking ahead of the hottest summer months, July and August. Thomson Reuters Eikon weather reports show that large parts of North Asia, including cities like Beijing and Tokyo have experienced unusually warm weather since late May.

 Beijing temperatures seen at 29 degrees Celsius next few days, 7 degrees above seasonal average.

Supply disruptions from South African miners have also pushed up Newcastle prices, with buyers choosing Australia to meet demand.

"Supply is tight out of Australia. What has also happened is exports out of South Africa are down... That opens up the market for more Australian coal into Asia," said Shane Stephan, managing director at New Hope, Australia's third largest independent coal producer.

The price rise has seen Australian coal miners such as New Hope and Whitehaven Coal  revenues grow. New Hope shares have now more than doubled from their 2016 lows, to around $A2 a share. Whitehaven shares have climbed 16-fold from their 2016 lows, to almost $A6.

Whitehaven shares were up 2 cents, or 0.4 per cent at $5.60 while New Hope shares were 5 cents, or 2 per cent higher at $2.50 at 1405 AEST on Friday.

Source: Reuters

From a sunburnt country ...

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