Is China about to reignite ASX 200 coal shares?

Happy coal miner.Happy coal miner.

S&P/ASX 200 Index (ASX: XJO) coal shares are off to a solid start in 2023.

Having all more than doubled their share prices last year, Whitehaven Coal Ltd (ASX: WHC), New Hope Corporation Limited (ASX: NHC), and Yancoal Australia Ltd (ASX: YAL) are all in the green in this first week of trading in the new year.

This comes in the wake of a smashing year for the big coal stocks in 2022.

ASX 200 coal shares enjoyed some gale force tailwinds as the price of thermal coal – used to generate electricity – soared to record levels.

Demand for high-quality Aussie coal lifted across the world, with the notable exception of China, following Russia’s invasion of Ukraine and the resultant global sanctions on Russian energy exports.

China’s ban on Aussie coal imports entered its second year in 2022. The unofficial ban was put in place, in part, as a response to Australia’s support of an inquiry into the origins of the COVID virus.

But now, early rumours suggest, that China’s Aussie coal ban could be lifted as soon as 1 April. Which would certainly be welcome news to the ASX 200 coal shares.

All eyes on China’s National Development and Reform Commission

The Australian and Chinese governments have been making some progress in mending their frayed relations.

In a sign the improved sentiment may be paying off, Bloomberg reports China’s National Development and Reform Commission this week discussed reopening the door to some Aussie coal imports.

People familiar with the matter, who wished to remain anonymous, indicated that China Baowu Steel Group Corp, China Datang Corp, China Huaneng Group Co and China Energy Investment Corp could be allowed to make new purchases in 2023.

Imports, much of which would likely be sourced from the big ASX 200 coal shares, could restart by 1 April.

The immediate impact is unlikely to be huge, in part because the big coal miners can’t simply turn a tap to ramp up production. That takes many months or years even.

But Ray Attrill, head of currency strategy at National Australia Bank Ltd (ASX: NAB) in Sydney, noted that if China reopens its ports to Australian coal imports, it could send prices higher.

There will be an overall “impact on sentiment from evidence of improving relations with China,” he said.

ASX 200 coal shares have been on fire

As mentioned above and you can see in the charts below, ASX 200 coal shares have been strong outperformers over the past 12 months.

And the big miners could be in for some additional tailwinds in 2023 if China indeed lifts its import ban on Aussie coal.

The post Is China about to reignite ASX 200 coal shares? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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