Though often overshadowed by the larger steelmaking commodity, iron ore, metallurgical coal, an essential fuel, has been a standout in the energy commodity market in recent times.

Australia is a major player controlling more than half of the global supply of metallurgical coal, three times more than the closest competitor, the United States.

The price of this Australian commodity, also known as coking coal, on the Singapore Exchange surged to $315 a metric ton recently, showing a 40.3% rise from its 2023 low of $224.50 a ton on July 6th.

This contrasts with Australian high-grade thermal coal which has had only a 0.5% spike from its 2023 low.

In relative terms, Brent crude oil has seen an increase of 13.4% from its December trough, while spot liquefied natural gas has slipped 2.2% from its 2023 weakest point.

In contrast with iron ore, the coking coal market is more evenly distributed with demand across both developed countries of North Asia and developing regions of South Asia.

As projected by commodity analysts Kpler, a significant portion of the recent surge in coking coal prices could be attributed to heightened demand from India.

Its imports have increased from 53.32 million tons in 2020 to 70.49 million in 2023.

However, Australian coal exports, highly impacted by severe weather conditions in Queensland, have been declining, but Kpler data shows a recovery in February with 17.86 million tons being shipped, the second-highest on record.

BHP Group (ASX:BHP), the largest global shipper of metallurgical coal, anticipates sustained demand for this market for decades.

However, concerns are present over new investments due to the Queensland state government’s significantly increased royalties in July 2022.

BHP Group is an Anglo-Australian multinational mining, metals and petroleum company regarded as the world’s largest in the mining and metals sector.