World enters new coal golden age


According to markets, coal is in a new super-cycle with prices far above anything ever seen before. The pre-GFC blowoff was $150. Now look at futures forever:

Prices never budge below $300 per tonne. This is FAR above the entire global cost curve. Indeed, it is so far above it that markets are incentivising a new golden age of coal. Pretty much every gram of unmined coal anywhere is going to be dug up and burned.

Don’t be fooled by arguments about climate change and corporate social responsibility. There is so much money to be made here that the Glencores of the world will ensure massive amounts of more coal is coming.


China has already started it, unearthing and burning more coal this year than ever before by far, and it is still short:

Korea is pivoting too:


South Korean utilities straining under the pressure of pricey gas are turning to cheaper coal to meet surging electricity demand during a power crunch.

Companies haven’t been curbing coal power generation since July, ignoring voluntary limits put in place by the government last year, according to people familiar with the matter, who asked not to be identified because the information isn’t public.

Local coal stocks are in heaven:

I can think of no more fitting end to mankind. Then again, perhaps markets have gone mad and as Europe transitions successfully off Russian gas over the next couple of years, the new coal golden age will crash.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.