This commodity has been going 'quietly parabolic'

In case you missed it, coking coal has been going nuts in the last few weeks.

Also called metallurgical coal, it's a vital fuel used to make steel, the backbone of global infrastructure and of China's industrial boom.

The Steel Index's premium hard coking coal index has gained 90% in the past month. It's now the best-performing commodity of the year, the FT noted, up 166%.

A supply squeeze in China has been the main driver of the rally, according to Alex Hacking, an analyst at Citi.

The Chinese government moved to reduce its excess coal capacity to boost the industry's profitability and curb pollution. It cut the number of days miners are permitted to work.

Also, shipments from Glencore, a metallurgical coal producer, were derailed in Australia last weekend, and this helped lift prices, according to RBC Capital Markets.

Business Insider Australia's Greg McKenna noted that the move has pushed spot prices of premium hard coking coal above $200/t, a level last reached when one-third of global supply was disrupted by flooding in Queensland in 2011 and 2012.

In a client note on Friday, Pavilion highlighted the move with the following commentary:

"It probably has been off your radar screen, but one commodity has been going quietly parabolic since July: coking coal. The Chinese government ordered a reduced work week for the country's coal mines earlier this year, with a view to improving the industry's profitability. As a result, Chinese steel mills have been scrambling to import coking coal, which is used to heat up iron ore in steel making.

This has been quite the squeeze: prices are up around 150% over the past few months."

"This price is unsustainable, in our view; and Citi's global commodity team forecasts an average price of $90/ton in 2017E," wrote Alex Hacking, an analyst, in a note on Monday.

The chart below shows the volume-weighted average of transaction-price data that companies submit to The Steel Index.