Market optimism continues on Tuesday with the benchmark S&P/ASX 200 Index (ASX: XJO) gaining another 0.61% to 6,746.7 points in late afternoon trade.
It comes as ASX coal shares hit back against recent selling pressure, recording strong gains as well.
The Betashares Australian Resources Sector ETF (ASX: QRE) – a proxy for the sector's performance – has clipped a 3% gain at the time of writing, bouncing from monthly lows.
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Why are ASX 200 coal shares rallying on Tuesday?
The price of coal has been bullish lately having climbed from previous lows of US$258/tonne on 30 March.
It tracked north to a high of US$427/tonne on 31 May before settling back to its current level of US$392/tonne.
Its movement marks a tremendous run for the black rock since the pandemic struck back in 2020.
For context, on 1 September 2020, coal hit a closing low of US$49 per tonne. Since then, its price has exploded more than 700%, as illustrated below.
The prospect of a potential energy crisis in Australia is putting upward pressure on the coal price, Reuters reports.
Meantime, Trading Economics is forecasting coal to fetch US$503/tonne in a year's time.
To put themselves in the box seat, some investors are rallying behind key ASX coal players to position themselves for the potential upside.
Shares in New Hope Corporation Ltd (ASX: NHC) spiked 7.36% today while Whitehaven Coal Ltd (ASX: WHC) is more than 3% higher.
Both miners have seen their share prices surge along with the commodity boom. They are up 102% and 152% in the last 12 months, respectively. Their returns year to date are shown below.
