The market for coal used to make steel is in the summer doldrums, but supply outages in Australia and the United States are providing underlying tightness that could cause prices to spike in the late summer and fall once Asian steelmakers start restocking.
Mine fires in Australia and West Virginia and a lock and dam closure in Alabama are causing latent tightness that won't become visible until India and China come back to the market between August and October. Once they do, prices are likely to move higher but remain capped below record highs by a sluggish global economy.
"The supply side looks very supportive of met coal prices," John Berman, chief investment officer with natural resources investment management company Berman Capital Group, told Benzinga. "It's the demand side that is potentially the brakes on any price rally."
