Montreal, Canada

It isn’t clean-burning and it’s loathed by environmentalists, but coal is now in a bull market once again after hitting two-year highs this month at $115 a ton based on Newcastle thermal coal prices.

Not even ultra-cheap natural gas – about the only commodity on the planet that hasn’t rallied since the Fed’s QE II announcement – is making a dent in coal prices.

Boosting prices is a combination of rising demand from Asia, namely the Chinese, and 15 billion dollars’ worth of deals this month. U.S.-based Walter Energy bid for Canada’s Western Coal for $3.3 billion dollars last week, which follows other bigger acquisitions or planned sales this fall.

China could overtake Japan as the world’s largest importer of coal, possibly in 2011. China is now a net importer of coal after years of being a net exporter.

Incredibly, the commodity-hungry nation has shifted from net exporter to net importer of many raw materials over the last decade as she strives to secure global supplies. China is now the largest foreign investor in Africa, dominating commodity production with major stakes in several economies.

But the big move in many commodities recently has suggested that maybe we’re in the latter stages of a bull market and, possibly, entering the “bubble” zone.

Commodities are now entering the beginning stages of a mania. At this point in the cycle – now in its ninth year of a secular bull market – raw materials are dominating the financial press and littered by headlines of mergers and acquisitions; this is typical late-stage market action and suggests prices for many commodities are reaching the tipping point.

Still, the party will continue until the next blow-up occurs, probably in China or perhaps another debt crisis in the eurozone or municipal bonds crashing in the United States.

The main driver of commodities consumption remains firmly intact. These include a rapidly expanding Chinese economy that’s currently in the process of overheating once again, super low U.S. and international interest rates, scarce global supplies of hard assets and a weak dollar. Until one of more of these important foundations crack, the bull lives on.