ASX 200 Coal Stocks in Focus as Wind Power Weakens

2 min read | July 07, 2024 10:00 AM EDT | By Team Kalkine Media

ASX 200 Coal Stocks in Focus as Wind Power Weakens — Image source: shutterstock.com

Performance Overview

Over the past 12 months, ASX 200 coal stocks have outperformed broader market indices:

New Hope Corp Ltd (ASX: NHC) shares are up 5.4%
Whitehaven Coal Ltd (ASX: WHC) shares have surged by 35.5%
Stanmore Resources Ltd (ASX: SMR) has seen a substantial increase of 59.3%
Yancoal Australia Ltd (ASX: YAL) shares have risen by 54.9% and are expected to join the ASX 200 soon due to its growing market capitalization.

Shift in Power Generation

The resurgence in coal-fired electricity production in Australia during the June quarter has been notable. While wind power generation in the National Electricity Market (NEM) declined by 19.8%, coal-fired electricity increased by 6.5%. This shift underscores a continued reliance on traditional energy sources to maintain grid reliability amidst seasonal challenges faced by renewable energy sources like wind and solar.

Market Insights and Expert Opinions

Experts, including Geoff Eldridge from Global Power Energy and independent consultant Matthew Rennie, emphasize the ongoing demand for thermal coal given the delays in renewable energy infrastructure development and the need for reliable baseload power.

Morgan Stanley highlights metallurgical coal as a top commodity pick, forecasting prices to reach US$290 per tonne by the end of 2024, driven by anticipated demand rebounds from India and supply disruptions affecting major coal mines.

Robert Gregory from Glenmore Asset Management shares a bullish outlook, noting that ASX 200 coal stocks are capable of generating substantial profits and dividends even in challenging price cycles. He anticipates potential earnings growth and a possible re-rating of these stocks with a recovery in coal prices.

The strong performance of ASX 200 coal stocks reflects their resilience and profitability amidst evolving energy market dynamics. With supportive forecasts for coal prices and ongoing global demand, these stocks are poised to continue attracting investor interest, especially in light of their dividend-paying capabilities and potential for future earnings growth.

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