Asia’s coal price benchmark rose to a five-month high after hot summer weather boosted demand for air conditioning and reduced brimming inventories.

Australian Newcastle futures rose to $115.50 per ton, the highest for the front-month contract since February. Coal-fired power generation in Tokyo hit the highest level in 10 months on Friday amid higher-than-normal temperatures. Japan is a major importer of Australian coal.

This marks a turnaround for seaborne coal prices, which had collapsed earlier this year to their lowest level since 2021 after milder winter weather curbed demand in China and other major Asian importers. Still, prices remain 75% below their recent peak in 2022 following Russia’s invasion of Ukraine.

The potential for above-normal temperatures in China, Japan and South Korea poses further upside risks to coal demand, Goldman Sachs analysts, including Hongcen Wei said in a report dated July 27.

China’s coal inventories have been falling since early June and are currently at levels lower than they were at this time last year, which could lead to incremental imports over the next three months, they said.