Coal has leapt to its highest levels since late 2016, led by strong manufacturing in China and the wider Asian market.
Fossil fuels continue to account for 40 per cent of energy consumption in Asia and therefore is closely linked to manufacturing and the wider global economy, which has been suggested to be experiencing its greatest period since the financial crisis.
Ivan Glasenberg, the chief executive of Glencore said: “Thermal coal — once again it is powering Asian growth and urbanisation,” he added: “It’s another commodity where there’s been under-investment over the years.”
Australian coal, which largely acts as the benchmark for the Asian market, is trading at $103 a tonne, compared to $80 a tonne six month ago, and it is believed by traders that it could remain above $100 a tonne through to the annual contract negotiations between Japanese utilities and Australian producers.
While these contracts only account for 50% of Japanese coal imports, the figures discussed in negotiations are used as a benchmark for the wider Asian coal market.
These figures support research from the International Energy Agecy (IEA) earlier this year that said there would be significant growth in demand for coal in South East Asia over the next two decades.