Rising commodity prices a boost for Australia

The prices of commodities are rising sharply as the world reacts to Russia’s invasion of Ukraine — and Australia could benefit.

Australia is set to cash in on skyrocketing commodity prices after crippling sanctions were imposed on Russia.

The international demand for Australian commodities could double due to the conflict in Ukraine.

Futures pricing for a tonne of coal has lifted by 40 per cent to $US440 – almost doubling the price since Friday.

Buyers in Europe, Japan, South Korea and China are scrambling to address their exposure to Russian coal. And there are major concerns about supply.

Russian Russian metallurgical coal producer KRU has already declared a force majeure for cargoes to western Russian ports over railway issues.

There are rumours other Russian coal producers may declare force majeure on shipments, Mining.com reports.

The price of copper has climbed sharply. Picture: istock

The price of copper has hit an all time high, approaching $13,600 a tonne. The price of nickel is also shooting up.

That could open the door for Aussie miners, with Australia’s copper exports already growing to $10.4 billion in 2020.

Russia is not a major copper producer but the war has made the market skittish.

“The market is in a panic mode in terms of supply,” T-Commodity analyst Gianclaudio Torlizzi said.

The price of gold and crude oil have also jumped sharply.

Australian exports to boom

NAB economist Taylor Nugent said the price movements were pointing to a 30 per cent jump in Australian export earnings in March.

He told The Australian, if the gains were sustained, monthly coal exports could double by their current level in April or May.

Just last week, reports emerged that the European conflict could be the trigger for stalled LNG projects to come back on the table.

Multiple major oil and gas companies have decided to pull out of Russia due to the conflict and sanctions imposed by western nations.

EU must get off the Russian energy needle

“European Union must completely get rid of dependence on gas, oil and coal from the Russian Federation through diversification, energy efficiency and energy transition,” said the head of the European Commission, Ursula von der Leyen. pic.twitter.com/mV0Ec1uZkL

— NEXTA (@nexta_tv) March 5, 2022

And Australia’s industry could be primed to deliver in its place.

Europe’s gas markets are struggling after the suspension of the Nord Stream 2 pipeline from Russia to Western Europe. Meanwhile, customers of Russia’s Gazprom face a potentially major disruption to supplies.

People from war-torn Ukraine board a bus that will take them to Poland. Picture: Getty Images.

Sanctions from the UK government to the Russian shipping industry are expected to further ratchet up delivered costs of gas.

The soaring price of gas is expected to reopen stalled conversations about Woodside’s Browse venture off the Kimberley coast in Western Australia and its Sunrise project in Timor-leste.

The Sunrise operation has been stalled for years due to disagreements on how the resource would be developed.

LNG and coal exports have come under fire in Australia in recent years due to the impact of these operations on the environment and climate.

Higher commodity prices will increase the cost of producing goods and could supercharge inflationary pressures.