The spot iron ore price jumped 3.7% overnight to US$67.43 a tonne, its highest level since April 2016, when the metal soared briefly above US$70 a tonne.

The rally is being driven by massive daily increases in coking coal prices – which rose more than 7% overnight to US$289.30 a tonne – from US$270 a tonne the previous day. A year ago the spot price was just US$73.40 a tonne.

Here’s what a recent chart of the coking coal price looks like – and that only goes up to US$206.40 a tonne (September 22).

bloomberg-coking-coal-price-sept-2016

Source: Bloomberg

 

Chinese government policy has reduced the number of annual working days at its mines, cutting output by as much as 10% so far this year. Miners have lowered output to the equivalent of 276 days of production – down from 330 days. Imports of coal have soared as a result, jumping 45% in August to their highest level in 13 months according to Bloomberg.

Heavy rains, mine interruptions and derailments in Australia have also added to rising coal prices.

The rising coal and iron prices are excellent news for Australian miners, particularly BHP Billiton Limited (ASX: BHP). BHP is the world’s largest shipper of coking coal according to Bloomberg. But other coal miners including Whitehaven Coal Ltd (ASX: WHC), New Hope Corporation Limited (ASX: NHC) Rio Tinto Limited (ASX: RIO) and even Wesfarmers Ltd (ASX: WES) will also benefit from higher coal prices.

Iron ore miners BHP, Rio, Fortescue Metals Group Limited (ASX: FMG) and the junior players including BC Iron Limited (ASX: BCI), Mineral Resources Limited (ASX: MIN) and Grange Resources Limited (ASX: GRR) will all benefit from the higher iron ore price – as long as the price remains high, and doesn’t come crashing back to earth.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.