Invezz is an independent platform with the goal of helping users achieve financial freedom. In order to fund our work, we partner with advertisers who may pay to be displayed in certain positions on certain pages, or may compensate us for referring users to their services. While our reviews and assessments of each product are independent and unbiased, the order in which brands are presented and the placement of offers may be impacted and some of the links on this page may be affiliate links from which we earn a commission. The order in which products and services appear on Invezz does not represent an endorsement from us, and please be aware that there may be other platforms available to you than the products and services that appear on our website. Read more about how we make money >
A beginner’s guide to coal: Price, uses & market overview
Trade your favourite markets with our top-rated broker, .
eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.
On this page, we explore everything you need to know about coal. Gain insights into coal market trends, pricing mechanisms, and the environmental impact of coal.
Read on to learn more about this popular commodity and find links to beginner friendly guides explaining how you can get involved in coal.
What is coal?
Copy link to sectionCoal is a fossil fuel that has helped shape the modern world. Taking millions of years to form through compressing remains of ancient plants, coal has massive energy potential and is a primary source of electricity generation around the world.
Beyond a power source, coal is a key component in many industries including steel production, chemical production, fertilisers, pharmaceuticals, and more. In recent decades the coal industry has experienced remarkable growth. Mostly driven by rising energy demands, coal production has surged reaching an annual output of nearly 8 billion tonnes.
Coal market overview
Copy link to sectionCoal, like other energy commodities, has experienced both highs and lows in price. During the industrial revolution, its demand skyrocketed, pushing its price to highs not seen before. However, since the advent of alternative energy sources such as oil and natural gas, coal’s dominance has been gradually declining.
In recent years, the global coal industry has grown significantly. Thanks to developing nations pushing demand higher, coal futures reached new highs in the early 2010s. Then in 2020, coal surged in value jumping approximately 400% in just two years. However, this has been short-lived, and its price is trading back lower.
Coal is traded on various futures exchanges with the Intercontinental Exchange (ICE) and the New York Mercantile Exchange (NYMEX) serving as major hubs. These exchanges allow for futures trading, allowing trades to buy and sell contracts, manage risk, and hedge against price fluctuations.
Is coal valuable?
Copy link to sectionYes, coal is a valuable commodity and there are numerous reasons why investors are attracted to the market. We have highlighted some of these key fundamentals below, explaining what they are and why they matter.
- Coal could last for centuries. Coal is an abundant resource and many experts suggest that it could last for centuries. This abundance means there will be a stable supply of coal for energy production and other uses long into the future.
- It is more affordable than other energy sources. Coal is one of the most affordable electricity sources. Particularly in developing countries, the cost of coal has been a major factor in driving economic growth.
- Coal is a versatile resource. Coal is used for more than just generating electricity. Its versatility means it is used across various industries including steel production, chemical manufacturing, and pharmaceuticals.
- It is easy to transport. The production of coal and transportation of coal has been going on for many decades. The coal transportation infrastructure in particular is very well established making it less susceptible to supply disruptions.
- Coal is a volatile market. Coal prices have shown periods of volatility in the past. While volatile markets may scare some investors off, price fluctuations can be good for some offering the opportunity to capitalise on swings.
How to invest in coal
Copy link to sectionYou can invest in coal by using a commodity trading platform. These platforms offer a range of commodities and are very easy to use. There are different platforms suitable for specific requirements.
Some let you buy coal, others let you trade coal, and many are designed for investing in the grain. Visit our dedicated guide to discover how to invest in coal.
Coal in your investment portfolio
Copy link to sectionA diverse investment portfolio can help protect you during market uncertainty, and the inclusion of coal can add value while allowing you to spread your money across various markets.
Coal often moves independently to traditional investments like stocks and bonds. You can include coal in your portfolio as a hedge against potential losses. During times of economic uncertainty, investors view commodity grains such as coal as attractive options.
Coal’s long history and the fact it generates electricity for much of the world, makes it a good long term play.
Coal vs other commodities
Copy link to sectionCoal is part of the energy family of commodities, including oil, natural gas, and ethanol. Each commodity is unique in its own way and offers different features for investors and traders. You can learn more about specific commodities using our dedicated guides below.
- Oil. Oil is an essential commodity used globally for energy production.
- Natural gas. Natural gas is an energy commodity used to power nations across the world.
- Ethanol. Ethanol is a fuel made by fermenting and distilling sugars from crops like corn and grains.