China losing the war against these ASX shares

There are signs that China’s punishing campaign against Australian commodity exports is backfiring as the country is taught a tough…
The post China losing the war against these ASX shares appeared first on The Motley Fool Australia. –

There are signs that China’s punishing campaign against Australian commodity exports is backfiring as the country is taught a tough lesson in economics 101.

Two dozen cities across China’s heartland are forced to ration electricity, reported

This is due to a much hotter than usual summer and lack of coal to fire-up their power stations.

Surging commodity prices haunting China

Further, the price of thermal coal is surging. The commodity is up more than 90% over the past year and is trading at its highest level since 2018 at around US$121 a tonne.

While coal prices surge, energy demand has jumped 24% over the same time last year. It isn’t only the unseasonably hot weather that’s to blame.

Power demand from factories is soaring as the Chinese industrial machinery goes to full speed to meet pent-up demand as the world emerges from COVID-19.

Burning cash

It’s also reported that 16 or 18 power plants owned by one of China’s largest power utilities, Guangdong Energy Group Co, is running at a loss in the first quarter of 2021, according to

The Chinese government is prioritising home cooling over industrial production. This is forcing factory owners to operate at night and panic buy portable power generators. This reminds me of the toilet paper frenzy that hit our supermarkets.

In case you forgot, China banned the import of Australian coal as it seeks to punish the Morrison Government.

ASX shares beating Beijing

ASX coal miners finally have a reason to feel more upbeat. The Whitehaven Coal Ltd (ASX: WHC) share price and New Hope Corporation Limited (ASX: NHC) share price have rallied recently.

The Chinese government isn’t one for admitting defeat. It said that the problem isn’t linked to the Australian coal ban and that domestic supply of coal is sufficient to meet demand.

I am not sure who believes that but China is pointing to similar issues in Japan and Taiwan.

Hot weather playing havoc

However, Japan has little reliance on coal for power and it’s also suffering from an extremely hot summer.

Meanwhile, the lack of rain in Taiwan is holding back the county’s hydroelectric power generation.

Ask any economists that isn’t employed by China and they will tell you that China’s ban on our coal has curtailed supply to that market and is contributing to the problem.

China at war with several ASX shares

Let’s also not forget that Beijing has slapped prohibitive duties on other Australian goods, including barley, wine and seafood.

Coincidentally, global food prices have surged to a decade high too. Droughts in countries like Brazil and other supply chain disruptions caused by COVID-19 are to be blamed.

There’s less evidence that these bully-boy tactics are coming back to bite the Asian giant in the posterior. But it’s never a good idea to cut off a major supplier at a time of rising prices.

The post China losing the war against these ASX shares appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

These ASX coal shares shone today. What’s next?

The Whitehaven Coal (ASX:WHC) share price gained 23% in May
These were the best performing ASX 200 shares in May

ASX 200 up, Zip rises, Aristocrat Leisure reports

ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!