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Thungela and Coal

June 17, 2024
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Josh Viljoen
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Josh Viljoen

How does the price of coal impact Thungela's price?

 

Thungela one of the country's leading coal producers and exporters. As a single commodity producer they are highly exposed and sensitive to the prevailing coal price. But how closely does the price of Thungela's shares track the price of coal?

 

To assess this I have plotted Thungela's share price against the price of Richard's Bay coal futures. Thungela's share price movement is shown in blue and the coal futures price is shown in orange. 

 

Looking at the attached chart we can see that there is high correlation between the price of Thungela's share's and the price of coal futures. Thungela share's are more volatile than the coal price with larger price swings. In the same period the coal futures price rose 100% the price of Thungela share's rose by 300% making Thungela essentially a leveraged bet on the coal price with an attractive dividend yield underpinning the capital movement. 


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