In the shadow of oil, coal markets rise from the ashes – by Henning Gloystein and Sonali Paul (Reuters U.K. – February 1, 2018)

SINGAPORE/MELBOURNE (Reuters) – Far from entering the death throes predicted by some environmentalists and analysts, thermal coal miners are enjoying their best returns in years as strong Asian demand and tight supplies send prices soaring.

Chinese thermal coal futures hit a record of 687 yuan ($108.49) this week, up five-fold from their 2016 lows. Coal cargo prices from Australia’s Newcastle terminal, meanwhile, have roughly doubled since 2016 lows to over $100 per tonne, not far off 2011/2012 levels.

“The coal price improvement has thrown into stark relief the robustness of underlying demand in Asia,” Paul Flynn, chief executive of Australian miner Whitehaven Coal, told Reuters. “This had been masked until recent times by the surplus of capacity constructed during the last cycle. This period has now passed.”

While the spotlight of a broad energy market revival has been on oil and natural gas, specialist thermal coal miners are enjoying an even better run, suggesting investors think this much reviled fossil fuel has life in it still.

“We made global thermal coal our favourite commodity in October and stuck with it,” said Jeremy Sussman, New York-based analyst at brokerage and investment bank Clarksons Platou.

Whitehaven, Indonesia’s Adaro Energy and global commodity merchant Glencore have all seen their share prices multiply from record lows in 2015/2016, hitting levels last seen during the mining boom before 2012.

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