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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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Sunday, 13 December 20
LONGSTANDING DOWNSIDE RISKS TO TRADE OUTLOOK - BALTIC EXCHANGE
The OECD has attempted to put a positive spin on the trade message emanating from its latest economic outlook, released last week.
The ...
Sunday, 13 December 20
INDONESIA COAL OUTPUT AT 514 MILLION TONNES THIS YEAR, 2021 TARGET UNCHANGED - REUTERS
Indonesia coal output in the period to Dec. 10 stood at 514.2 million tonnes, official data from the energy ministry’s website showed.
&n ...
Thursday, 10 December 20
MALAYSIA'S CIMB ANNOUNCES COAL FINANCING PHASE-OUT BY 2040 AS ASIA'S FOSSIL FUEL DIVESTMENT DRIVE ACCELERATES - IEEFA
The first emerging markets bank to announce a progressive coal exit policy
Malaysia’s CIMB Group Holdings (CIMB) has announced ...
Wednesday, 09 December 20
MARKET INSIGHT - INTERMODAL
Heading towards the end of a difficult year and with the entire planet under the shadow of the covid-19 virus, it is interesting to proceed with a ...
Tuesday, 08 December 20
MARKET ANALYSIS - ALLIED SHIPPING
It is now undisputed that oil consumption for 2020 will post a considerable drop, as demand for several petroleum products has plummeted since the ...
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- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- South Luzon Thermal Energy Corporation
- GMR Energy Limited - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Savvy Resources Ltd - HongKong
- Sojitz Corporation - Japan
- Australian Commodity Traders Exchange
- Georgia Ports Authority, United States
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Billiton Holdings Pty Ltd - Australia
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Mercator Lines Limited - India
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Gujarat Mineral Development Corp Ltd - India
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Medco Energi Mining Internasional
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Economic Council, Georgia
- Kumho Petrochemical, South Korea
- Bhatia International Limited - India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Salva Resources Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Planning Commission, India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Bhushan Steel Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Tata Chemicals Ltd - India
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Anglo American - United Kingdom
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Grasim Industreis Ltd - India
- Karaikal Port Pvt Ltd - India
- London Commodity Brokers - England
- Gujarat Electricity Regulatory Commission - India
- Trasteel International SA, Italy
- Chettinad Cement Corporation Ltd - India
- Bulk Trading Sa - Switzerland
- Independent Power Producers Association of India
- Eastern Energy - Thailand
- Merrill Lynch Commodities Europe
- GVK Power & Infra Limited - India
- Singapore Mercantile Exchange
- Ministry of Transport, Egypt
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Edison Trading Spa - Italy
- Semirara Mining Corp, Philippines
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Orica Mining Services - Indonesia
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Ind-Barath Power Infra Limited - India
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Agrawal Coal Company - India
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- PNOC Exploration Corporation - Philippines
- Leighton Contractors Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Tamil Nadu electricity Board
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Attock Cement Pakistan Limited
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Pendopo Energi Batubara - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Wilmar Investment Holdings
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- IEA Clean Coal Centre - UK
- Renaissance Capital - South Africa
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
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