From Frank Holmes of U.S. Global Investors:

International coal prices hit $124 per ton this week, the highest levels in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia has made coal supply tight. The floods in Queensland, Australia cut the country’s output of coal by 15% and other big coal producers such as Indonesia, South Africa, and Colombia are experiencing similar production cuts due to floods of their own.

At the end of March 31, coal prices were 33% higher than a year ago... And earlier this month, mining giant Xstrata inked a one-year deal with a Japanese utility at $130 per ton, effectively setting a floor under coal prices in the near-term. That's up from $98 per ton the company made in a similar deal a year ago.

Perhaps no country is more affected by this development than China. With its economy powering ahead...

Read full article...

More on coal:

The easiest way to profit from skyrocketing coal prices

Casey Research: What the Australian floods could do to coal prices

How Japan will create huge buying pressure for coal and natural gas