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Thursday, 17 December 20
CHINA'S BAN IS LESS OF A THREAT TO AUSTRALIA'S COAL INDUSTRY THAN INTERNATIONAL CLIMATE AMBITION - IEEFA
 Australian coal exporters will survive this near-term political fight but there are longterm structural headwinds
The decision by China’s National Development and Reform Commission to formally and indefinitely block Australian coal imports is a key threat to Australia’s political and economic wellbeing. Australia can never expect to win a trade war with its biggest export partner, and it is sheer political and economic suicide to try to do so. But is it devastating for the Australian coal export industry? Not at all.
Far more strategically threatening in the long term for Australia and our coal industry is the pledge by China’s president Xi Jinping to reach net zero emissions by 2060, which was rapidly followed by net zero emissions by 2050 pledges from Japan’s prime minister Yoshihide Suga and South Korea’s president Moon Jae-in. This series of sudden and powerful pledges of increased climate ambition by world leaders is likely to be terminal for our coal exports if we look out a couple of decades.
Australia is caught in the geopolitical quandary of having China as our key trade partner and the United States as our key military ally. When US president Donald Trump started a trade war with China, it was never going to turn out well for Australia. And incoming president Joe Biden is unlikely to change tack too materially where China and trade and technology are concerned (whereas on climate, Biden’s arrival changes everything). But we in Australia are like a mouse caught in the middle of two sparring elephants.
In business, the best rule is that the customer is always right (even if they are not). Our coal exporters will however survive this near-term political fight, probably far better than our wine or lobster export industries, by comparison.
There are no coal ships destined for China being loaded in Australia now. For most industries, that would be devastating. For coal, not so much. In fact, a look at the share prices of Whitehaven Coal and New Hope Corporation would suggest quite the opposite. Since the September 2020 trough, and acknowledging the sharp price falls on Tuesday, Whitehaven shares have rallied 70% and New Hope are up almost 20%.
Why? Coal is coal, at least to a finance analyst like me, if not an engineer. Australia sells the vast majority of its coal to Japan, South Korea and Taiwan. And if China buys more Russian, South African and Indonesian coal to replace Australian coal, then we can, by and large, simply swap customers, maybe with a month’s disruption. Total demand doesn’t change, nor does supply – at least not in the near term. Sure, there are some boiler and blending constraints, but notwithstanding coal luddite claims that Australia’s coal is slightly less carbon polluting than someone else’s seaborne coal, the minute difference is irrelevant – all coal is almost 100% more carbon intensive than wind, solar, hydro, nuclear or energy efficiency. Or green ammonia, as Japan’s JERA is now thinking.
The coal industry is actually benefiting from a near-term relief rally. In September Australian coal exporters were losing money with every tonne of coal they exported. In December, the picture is very different. China’s key Shanxi province has just shut down coal production near term due to a spate of deadly accidents, just as winter heating demand has kicked in. Meanwhile the Chinese industrial economy is powering along. So the Chinese domestic thermal coal price has jumped 35% to 740/t yuan in the last three months. Seaborne thermal coal prices have rallied from a low of US$46/t to over US$70/t in the same timeframe. Even as total volume of Australian coal exports have dropped in the December quarter, the value has surged, and more importantly, the profitability much more so (notwithstanding the 10% rally in the Aus$/US$, lifted by the unprecedented rally in iron ore prices). Hence the Whitehaven Coal and New Hope increase in share price.
The coal export sector outlook seems profitable again – in the near term. But the 25% collapse in the Dalrymple Bay Coal Terminal share price since its initial public offering last week is a clearer perspective of the longterm structural headwinds Australia’s coal industry is facing. Far better for our Hunter Valley, La Trobe Valley and Bowen Basin communities that we as a nation acknowledge the science of climate change, prepare a national roadmap, ideally with a destination and time of arrival clearly acknowledged.
The investment, employment and export opportunities for Australia are enormous, and exciting. To steal a very good line from Ross Garnaut and Mike Cannon-Brookes – better we focus on building Australia as a renewable energy superpower.
This commentary first appeared in The Guardian.
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Wednesday, 24 March 21
MARKET INSIGHT - INTERMODAL
Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of s ...
Tuesday, 23 March 21
LOWER WHOLESALE PRICES PUT PRESSURE ON AUSTRALIAN ENERGY RETAILERS - FITCH RATINGS
Fitch Ratings expects the low wholesale energy prices in the Australian National Energy Market to persist through to 2022, which will affect electr ...
Tuesday, 23 March 21
SCRUBBER-FITTED SHIPS NEARLY DOUBLE AS FUEL SPREAD SETTLES AT $118 PER MT - PETER SAND
As the lion’s share of the world fleet replaced high-sulphur fuel oil (HSFO) with low-sulphur fuel oil (LFSO) as a mean of propulsion to be c ...
Tuesday, 23 March 21
CHINA'S COAL OUTPUT EDGES UP IN FIRST TWO MONTHS - XINHUA
China’s raw coal output rose 25 percent year on year to 620 million tonnes in the first two months of 2021, official data showed.
...
Wednesday, 17 March 21
MARKET INSIGHT - INTERMODAL
Shipping market players are familiar with the inverse correlation between the freight market and demolition activity i.e. when the market picks up ...
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- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Eastern Coal Council - USA
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Marubeni Corporation - India
- Pendopo Energi Batubara - Indonesia
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- CIMB Investment Bank - Malaysia
- India Bulls Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Karaikal Port Pvt Ltd - India
- Dalmia Cement Bharat India
- Jaiprakash Power Ventures ltd
- GN Power Mariveles Coal Plant, Philippines
- White Energy Company Limited
- Agrawal Coal Company - India
- Australian Coal Association
- SMC Global Power, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Essar Steel Hazira Ltd - India
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Jorong Barutama Greston.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Samtan Co., Ltd - South Korea
- Bukit Makmur.PT - Indonesia
- Port Waratah Coal Services - Australia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Mercuria Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Bayan Resources Tbk. - Indonesia
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Thiess Contractors Indonesia
- Orica Mining Services - Indonesia
- New Zealand Coal & Carbon
- AsiaOL BioFuels Corp., Philippines
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- The Treasury - Australian Government
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Metalloyd Limited - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Larsen & Toubro Limited - India
- Simpson Spence & Young - Indonesia
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Star Paper Mills Limited - India
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Independent Power Producers Association of India
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Medco Energi Mining Internasional
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Kobexindo Tractors - Indoneisa
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- The University of Queensland
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Central Java Power - Indonesia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Planning Commission, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Jindal Steel & Power Ltd - India
- ICICI Bank Limited - India
- Economic Council, Georgia
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Maheswari Brothers Coal Limited - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
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