Coal miners rocket as UBS sees 'limited downside' for sector
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The news: Australian coal miners were among the market's best performers as UBS analysts said they saw "limited downside" to metallurgical coal at current prices.
The numbers: Coal producers Whitehaven (8.6%), New Hope (6.5%) and Yancoal (2.6%) were all higher at 1:30pm AEST. Mining giant BHP — which co-owns the country's biggest coal exporter BHP Mitsubishi Alliance — surged 4.5%.
Small rivals Coronado Global Resources (16.7%) and Stanmore Resources (11.5%) also rallied.
Newcastle coal futures were last up 0.6% to USD112.50 ($171.31) per tonne.
The context: UBS analysts said they see "limited downside" to met coal when prices are below USD180 per tonne, but expect prices to trade sideways until more meaningful supply closures are announced.
They noted that thermal coal prices have lifted seasonally, supported by a higher gas price and supply disruption following wet weather in New South Wales.
However, the analysts said demand is "challenged" in India, Japan, Korea and Taiwan due to high China steel exports, and in China due to higher domestic met coal production and increased supply from Mongolia.
UBS also said its preferred coal pure play is NYSE-listed Core Natural Resources, over Australia's Whitehaven and Coronado.
The source: UBS research
