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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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Friday, 18 September 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Thursday, 17 September 20
LAST HOPES FOR DEMAND GROWTH SET TO DISAPPOINT THERMAL COAL EXPORTERS - IEEFA
Asian thermal coal exporters are fighting an uphill battle even in new markets
The world’s largest thermal coal exporter is eyeing new m ...
Wednesday, 16 September 20
MARKET INSIGHT - INTERMODAL
Another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction ...
Friday, 11 September 20
IMO 2020: A REVIEW OF THE TRANSITION TO VLSFOS - GARD
KNOWLEDGE TO ELEVATE
Many predictions were made in the run up to the imposition of the MARPOL 2020 sulphur cap, none of which was that the tra ...
Thursday, 10 September 20
U.S. COAL PRODUCTION IN 2020 TO BE 511 MMST, 28 PER CENT LOWER THAN IN 2019 - EIA
EIA expects total U.S. coal production in 2020 to be 511 million short tons (MMst), 194 MMst (28%) lower than in 2019. Mitigation efforts related t ...
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- ICICI Bank Limited - India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Mintek Dendrill Indonesia
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- SMG Consultants - Indonesia
- Petron Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Mercuria Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Sidhee Cement - India
- Anglo American - United Kingdom
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Borneo Indobara - Indonesia
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Australian Coal Association
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Singapore Mercantile Exchange
- Madhucon Powers Ltd - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Ambuja Cements Ltd - India
- SMC Global Power, Philippines
- Aditya Birla Group - India
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Billiton Holdings Pty Ltd - Australia
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Orica Australia Pty. Ltd.
- Simpson Spence & Young - Indonesia
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- Minerals Council of Australia
- Antam Resourcindo - Indonesia
- Port Waratah Coal Services - Australia
- GN Power Mariveles Coal Plant, Philippines
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Thiess Contractors Indonesia
- Ministry of Mines - Canada
- CNBM International Corporation - China
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- Deloitte Consulting - India
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- San Jose City I Power Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Parliament of New Zealand
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Posco Energy - South Korea
- London Commodity Brokers - England
- Barasentosa Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Asia Pacific Energy Resources Ventures Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- Edison Trading Spa - Italy
- Wilmar Investment Holdings
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Planning Commission, India
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Electricity Generating Authority of Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Independent Power Producers Association of India
- Banpu Public Company Limited - Thailand
- Star Paper Mills Limited - India
- The University of Queensland
- Larsen & Toubro Limited - India
- Lanco Infratech Ltd - India
- Toyota Tsusho Corporation, Japan
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vizag Seaport Private Limited - India
- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Central Electricity Authority - India
- Miang Besar Coal Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Petrochimia International Co. Ltd.- Taiwan
- Price Waterhouse Coopers - Russia
- Bukit Baiduri Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- OPG Power Generation Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Bharathi Cement Corporation - India
- Bhatia International Limited - India
- Savvy Resources Ltd - HongKong
- Indian Energy Exchange, India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
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