Coal benchmark jumps 46% as Ukraine war stokes supply fears

Futures for high-quality thermal coal loaded on ships at Newcastle port in Australia jumped to $446 a ton Wednesday, adding $140.55 in a single day and rising to the highest in data back to 2008, according to ICE Futures Europe.

Producers jumped in early Thursday trading in Sydney. Whitehaven Coal Ltd., a supplier to markets including Japan and South Korea, rose as much as 10% to the highest since 2019. New Hope Corp., Yancoal Australia Ltd. and BHP Group Ltd. also advanced.

Global commodities markets have been convulsed since Russia’s invasion of Ukraine began last week, as traders rush to secure alternative supplies of fuel and raw materials even without specific sanctions in place covering energy. Oil has extended a rally above $110 a barrel, while coal in Europe — where utilities rely on Russia more than any other supplier — has jumped to the highest since 2008.

The concerns over supply from Russia, which accounts for more than 17% of global exports, are adding to a catalog of bullish factors in recent months. These include Covid-related labor shortages in Mongolia and China, flooding across Australian mining regions and a decision by top shipper Indonesia to ban exports in January.

“Deteriorating European geopolitics has turned the burners up a further couple of notches,” Peter O’Connor, an analyst at Shaw & Partners Ltd. in Sydney, said in a Wednesday note.

Newcastle futures have more than doubled since Friday’s close of $220.95 a ton, and Wednesday’s record compares to a low last March of $80.50 a ton. Physical Newcastle coal prices rose to a new weekly record last week.