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the Yancoal Australia Ltd (ASX: YAL) The stock price climbs into the green during afternoon trading today and is currently changing hands 15% higher at $ 3.45 apiece.
Yancoal stock has rebounded from an earlier low of $ 2.37 in late September to 2-year highs, driven by the strength of the coal markets.
Read on for more details.
Why have Yancoal’s shares soared lately?
Yancoal’s share price has risen 28% in the past few days as coal prices have skyrocketed in the spot and futures markets.
A surcharge of US $ 228 per tonne is now reached for one tonne of coal, a new all-time high – a record that has been broken continuously on a linear basis since May of this year.
Since September 24th, the price of coal has made another upward move and has risen another 26% – or $ 47 / tonne – in a matter of days.
The rise in coal prices now represents a 290% year-over-year increase for fossil fuel, driven by headwinds in supply from China and the shift in investment trends into renewable energy.
Combine that with the recent surge in natural gas prices in the UK and Europe and the fact that coal is still the largest source of electricity for China and India – 35% of the world’s population – and the result is a flavorful recipe at the price of coal.
Yancoal holds a unique position in this regard as it is a purely ASX coal producer, meaning that all of its revenue stream comes from coal mining.
As such, it is considered a price taker, and its share price can and will fluctuate in direct correlation with the price of coal in the commodity markets.
So when the price of coal goes up, so does the price of Yancoal stock, and vice versa, as is the case with most ASX resource stocks that produce a commodity.
With that in mind, and with the recent surge in coal hitting another new record high, it makes sense why Yancoal stocks may have traded higher in the past few days.
Snapshot of Yancoal stock price
It’s been a pretty robust year for the coal company, with a market cap of nearly $ 4 billion, due to those strengths in coal pricing.
Yancoal’s share price is 43% higher since Jan. 1. Last month it increased by 46% and in the last week alone by another 36%.
As such, Yancoal shareholders posted a return of 72% last year, prior to the S & P / ASX 200 index (ASX: XJO) grew by around 25% during this period.