Supply disruptions, a drought in China and rebounding electricity demand have fired up the market for thermal coal, making the world’s least li

Thermal coal prices soar as demand for electricity rebounds

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2021-07-24 00:00:07

Supply disruptions, a drought in China and rebounding electricity demand have fired up the market for thermal coal, making the world’s least liked commodity one of this year’s best-performing assets.

Since the start of the year, the price of high energy Australia coal — the benchmark for the vast Asian market — has climbed 86 per cent to above $150 a tonne, its highest level since September 2008.

Its South African equivalent is also trading at its highest level in more than 10 years, rising 44 per cent in 2021, according to the latest weekly assessment by commodity price provider Argus.

That puts the coal benchmarks ahead of two of this year’s best-performing asset classes: real estate, which is up 28 per cent, and financial stocks, up 25 per cent. Only Brent crude, up 44 per cent, boasts comparable gains.

The resurgence of thermal coal, which is burnt in power stations to generate electricity, highlights the difficulties governments face in trying to make the switch to cleaner forms of energy.

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