Coal exchange traded funds climb on an insatiable Chinese demand for foreign supply with a growing shortage at home.
On Tuesday, the VanEck Vectors Coal ETF (NYSEArca: KOL), which tracks the coal industry, jumped 4.5% and the GreenHaven Coal Fund (NYSEArca: TONS), which is designed to offer investors with exposure to daily changes in the price of coal futures contracts, surged 3.7%. Coal has been burning up, with KOL up 72.5% and TONS 42.2% higher year-to-date.
Supporting the coal industry, China has been buying up coal shipments to support its massive steel industry, which recently drew the ire from global leaders on excessive output depressing prices, reports Rhiannon Hoyle for the Wall Street Journal.
According to the Steel Index, the price for premium coking coal exported from Australia rose to $158.4 per metric ton Tuesday, or up 4.1% from Monday and more than double the $78 per ton sellers were receiving for their coal t the start of the year. Coking coal prices are now at their highest since March 18, 2013.[related_stories]
Contributing to the surge in coal prices this year, China has drastically curbed its domestic coal production since April. Beijing is limiting the number of days miners can work in an attempt to control a bloated sector. Meanwhile, heavy rainfall across China’s northern coalfields have disrupted local mines and railways.