The most exciting story in the commodities market this year has been coal. Thermal coal prices have risen by a sharp 40% in the past three months alone while coking coal prices are up almost 130%.
For such a bland, boring commodity, which most analysts believe is on the way out as cleaner burning fuels replace coal as a primary energy source, this price spike is extraordinary. However, unlike the last time we saw this sort of jump (back in 2009/10) it is not a strong demand story. Instead, it is in response to Chinese policy measures aimed at curbing production and improving profitability of the sector.
