Coal prices have skyrocketed. This hasn't happened in a long time.

• Coal prices in Asia have risen to their highest level since February, driven by a heatwave and rising energy demand.
• This is a reversal of the trend after earlier declines, which were the result of a mild winter and lower demand in China.
• Goldman Sachs analysts forecast further growth in imports, especially to China, where coal stocks are currently lower than a year ago.

Newcastle coal futures from Australia have risen to $115.50 a tonne, the highest level for the next-month contract since February, Bloomberg reports.

Coal-fired power generation in Tokyo reached a 10-month high on Friday amid persistently above-average temperatures. Japan is among the largest importers of Australian coal, we read.

This is a turnaround in the prices of seaborne coal, the prices of which fell to the lowest level since 2021 at the beginning of the year due to:

• mild winter,
• lower demand in China and other major Asian importing countries.

"Despite the rebound, current prices are still 75% lower than at their peak in 2022, after Russia's invasion of Ukraine," Bloomberg reports.

Potentially higher-than-usual temperatures in China, Japan and South Korea could further boost demand for coal , Goldman Sachs analysts said.

According to them, coal inventories in China have been falling since early June and are now lower than at this time last year. This could lead to an increase in imports over the next three months.