Investors should look for exposure to continued high prices in 2018, one of the City’s most influential energy experts has stated.
Julian Treger, CEO of mining royalty business Anglo Pacific Group plc (LON:APF), said he expects the price of coal to rise further next year.
“We are going into a year which I think will be very similar to 2017. The expectations at the start of the year, when the coal price was quite high, was that it would go down in a straight line and end the year at around $130 per tonne for coking coal. The price is now around $260. In fact, the price went down a bit, but then it went back up,” he explained.
“A similar story was true with thermal coal, which started 2017 quite strongly. It was expected to go down and it turned out to be significantly higher. If there are weather-related incidents in Australia in Q1, 2018, which often happens with cyclones, the price of both coking and thermal coal could shoot up and rise to levels of $300 and $350.”
Treger, who holds an MBA from Harvard Business School and co-founded resource investor Audley Capital Advisors in 2005, argued that investors may have turned away from coal too soon.
“Compared to the general market expectations, for example, coal has been incredibly resilient,” he said. “Most people in the UK and the EU have dismissed coal as dead, but the fact is that it is actually growing in absolute amounts.”