Asia coal prices jump to record high; Peabody pops 7%

Jun. 27, 2022 2:57 PM ETPeabody Energy Corporation (BTU), AMR, ARCHCEIX, NC, ARLP, METC, HCCBy: Carl Surran, SA News Editor20 Comments

Heap Of Coal Isolated On White Background

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Asia's coal benchmark has surged to a record high, Bloomberg reported on Monday, threatening to further push power bills higher and add to inflation woes.

Spot physical coal at Australia's Newcastle port closed +3.4% to a record $402.50/ton on Friday, marking the first time the index rallied above $400, according to Bloomberg.

Traders told Bloomberg that a coal shipment for July delivery to Europe was sold at $421/ton on Friday, which would be an all-time high for the region.

The major coal-related equities are sporting strong gains in Monday's trading, including (CEIX) +8.8%, (NYSE:BTU) +7.3%, (NYSE:ARCH) +5.7%, (NC) +5.2%, (NYSE:AMR) +4.7%, (ARLP) +4.7%, (METC) +4.4%, (HCC) +2.3%.

Hotter than normal weather in northern China reportedly is pushing power demand to an all-time high, increasing the consumption of coal.

"Coal prices could be higher for longer," and Peabody Energy (BTU) shares are "cheaply priced" at 2x-3x free cash flows, Michael Wiggins de Oliveira writes in a bullish analysis posted recently on Seeking Alpha.

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