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.
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.
