Australian coal is flying amid the turmoil on global markets

Australian coal prices hit fresh record highs, with one shipment at $US450 a tonne, as major importers wind down contracts with Russia.

Coal prices hit fresh records as the world shuns Russian coal for the Australian variety.

Australian coal prices have hit fresh records as Japan and other major importers wind down contracts from Russian sources, with a single shipment of Australian coal said to have fetched a record $US442.50 a tonne on Thursday.

Market sources say a 25,000 tonne shipment of high grade coal, grading 6000 kcal/kg NAR, changed hands for the eye watering price on Thursday, with the coal most likely bound for Taiwan or South Korea.

The price is believed to be a record for coal traded through the Newcastle port and, assuming costs of around $85 a tonne to deliver the coal to the port, imply margins of almost $550 a tonne – or about $13.7m for the shipment.

Benchmark prices for high-grade Australian coal were trading at more than $US410 a tonne this week, amid a scramble for supplies as major buyers blacklist Russian mines.

The Japanese government announced its ban on Russian coal on April 8, and is now moving to phase out Russian oil and gas imports.

Russian supplies made up about 12 per cent of Japan’s thermal coal imports in 2021, according to the Japanese government, with major utilities now looking to boost imports from Australia, Vietnam and Indonesia, according to the county’s Ministry of Economy, Trade and Industry.

While other major coal buyers have not announced formal bans, utilities in South Korea and elsewhere have reportedly stopped buying Russian coal, adding to competition for alternative supplies.

Added to that is the shocking heatwave in India, which has caused a surge in energy demand in the country, causing shortfalls in coal supplies at its majority coal-fired generation fleet, adding to demand for lower grades of coal from exporters such as Indonesia.

The windfall pricing for thermal coal has delivered rivers of cash to Australian producers, with Whitehaven Coal saying last month it had paid off its debts in the March quarter, finishing the month with $161m in cash after holding net debt of $808.5m at the end of June 2021.

In late April fellow Australian thermal coal major Yancoal declared a $791m net profit for 2021, a remarkable turnaround from the $1.04bn net loss from the previous year.

Whitehaven shares have climbed from levels around $310 towards the end of February to a $5.18 close on Thursday, with Yancoal stock up from $3.33 three months ago to $5.65.

Originally published as Australian coal is flying amid the turmoil on global markets