Thermal coal is being tipped as a potential hedge to apossible rise in US interest by broker Liberum, which sees the commodity's record-breaking price run continuing.
The fuel is the bane of environmentalists for its use in coal-fired power stations, but energy and supply shortages have seen the price shoot higher recently.
Liberum believes US rate rises will affect demand for industrial and precious metals, but thermal coal is well supported by the current supply restraints, with Indonesia’s ban adding to the pressure.
On a stock basis, Liberum is a buyer of Thungela (510p target price), which it says offers exceptional value as global power demand recovery exposes the lack of investment in coal supply.
Glencore is also a buy (425p target) and the top pick among the majors.
“Copper’s forecast drag on share price performance is to be offset by robust demand in cobalt and coal; still has best re-rate potential vs. peers on positive ESG momentum.”