MYSTEEL: Share prices of Chinese coal companies surge on Iran tensions

Stock prices of China's thermal coal giants including Yankuang Energy Group Co., Ltd., Anhui Hengyuan Coal & Electric Co., Ltd., China Shenhua Energy Co., Ltd., and China Coal Energy Co., Ltd., had all risen sharply during the daytime trading session on March 2.

Among them, the stock price of China Coal Energy hit its daily limit at Yuan 16.33 ($2.38), marking the stock's highest level since June 2008, according to data from the Shanghai Stock Exchange.

Widespread concerns about LNG shipments from the Middle East have boosted sentiment in China's coal market, as tighter availability may push up global prices of the super-chilled fuel and encourage utilities to rely more on thermal coal for power generation, Mysteel Global notes.

After the weekend attacks, Iran "closed" the Strait of Hormuz, halting ship movements at the key choke point through which around 20% of global LNG supplies travel.

The disruption could potentially cause "relatively more aggressive moves" in European gas and Asian LNG prices, "given the risks to Qatari LNG flows and the market being relatively tighter", according to ING, a global banking and financial services corporation headquartered in Amsterdam.

In China, by March 2 the national composite price of domestic and imported LNG had climbed by Yuan 110/tonne from February 28 to reach Yuan 3,711/t including the 13% VAT, assessed by OilChem, a Mysteel subsidiary.

The bullish mood surrounding steam coal has also extended to China's coking coal market, as participants expect the stronger performance of thermal coal to support coking coal prices, market sources noted.

On the Dalian Commodity Exchange on March 2, the most-traded coking coal contract for May delivery ended the daytime trading session at Yuan 1,094/t, up 1.1% from the settlement price last Friday.

Written by Adrian Zhou, zhouwenhaoa@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com