Coal has been a stellar performer lately, with prices advancing in recent contract negotiations for both metallurgical coal (coking coal), used in steel manufacturing, and thermal coal, used to produce electricity. In Australia, premium hard coking coal jumped to 300 US dollars per tonne from about 97 US dollars, while thermal coal shotup to 125 US dollars pertonne from about 56 US dollars. The question is whether these increases are sustainable. It is important to note that a large part of coal production is consumed domestically, with only a portion, known as seaborne coal, being exported. China, for example, produces 2.5 billion tonnes coal per year, while it exports only about 70-100 million tonnes per year.
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