ASX coal shares have been on a rollercoaster journey over the past two years following the energy price spike in 2022.
Coal prices have dropped since the peak but are still higher than where they were a few years ago.
There are plenty of coal miners on the ASX, including New Hope Corporation Ltd (ASX: NHC), Whitehaven Coal Ltd (ASX: WHC), Yancoal Australia Ltd (ASX: YAL) and Stanmore Resources Ltd (ASX: SMR).
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What's the outlook for the commodity price?
New South Wales and Queensland are both hitting ASX coal shares with higher royalty costs at present, which isn't exactly a positive.
The broker UBS thinks there are data points that suggest a medium to long-term upside to coal prices due to structural costs and headwinds in supply growth.
Trading Economics said that Newcastle coal futures had "extended their strong momentum" towards US$145 per tonne in December, which was the highest in more than two months, thanks to increasing demand from key consumers.
Japan and South Korea — the two biggest consumers of hide-grade Australian coal — reportedly increased their purchasing activity towards the end of 2023.
Kepler data shows Japan is going to import almost 10.4mt of seaborne thermal coal in December, which is the most since March. And South Korea is expected to import the most since July 2021, which is helping offset softening demand from India and China.
In the quarterly update for the three months to October 2023, New Hope said the uncontracted market for high-quality coal had been limited and heavily discounted as physical pricing remained challenging leading up to the northern hemisphere winter. But, "in a tight market for the company's forward sales book is strong with no unsold supply until January 2024."
New Hope suggested the northern hemisphere winter could result in increased demand for coal.
At the recent annual general meeting (AGM), New Hope expects "demand for Australian coal to remain strong due to increasing energy demand to support development and population growth in Asia, and the need for reliable baseload power throughout the transition."
Is the market optimistic about these ASX coal shares?
According to a Commsec collation of analyst ratings, there are four hold ratings on New Hope shares, with two sell ratings.
Whitehaven shares have received seven buy ratings, two holds and two sells on Commsec.
With Stanmore shares, there are currently two buy ratings, according to the trading platform.
It'll be interesting to see how the share prices perform from here with those ratings in mind.
Ultimately, the direction of the coal price is likely to decide how the ASX coal shares perform in 2024 and beyond.
