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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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Saturday, 01 August 20
ASIA HOPE FOR LONG-TERM OIL DEMAND - BALTIC BRIEFING
Oil demand in Asia Pacific might be expected to plunge 1.8m barrels per day (bpd) this year, but there are still strong prospects for growth over t ...
Friday, 31 July 20
SHORT-TERM IMPACT ON THE CHEMICAL SHIPPING MARKET IF THE INDIA-CHINA DISPUTE ESCALATES - DREWRY
Due to the India-China dispute, the threat of deteriorating trade relations between the two countries has become real. Meanwhile, we expect freight ...
Friday, 31 July 20
PANAMAX: THE PERIOD MARKET REMAINS QUIET WITH FEW FIXTURES REPORTED - FEARNLEYS
Capesize
After weeks of dropping rates, there are finally some resistance for the Capes. Pacific rounds improving to upper15,000s by the middle ...
Friday, 31 July 20
PANDEMIC SENDING SOUTH AFRICAN COAL INDUSTRY TO EARLIER GRAVE - IEEFA
Could South Africa’s coal export industry, one of the largest in the world, be about to take a severe hit from the coronavirus?
...
Friday, 31 July 20
BOTSWANA PLANS MORE COAL-FIRED POWER AS AFRICAN SOLAR ACCELERATES - IEEFA
An African economic leader like Botswana should embrace solar to reduce subsidies and tariff hikes
As Sub-Saharan solar ambition has ...
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- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Orica Mining Services - Indonesia
- Bhatia International Limited - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Altura Mining Limited, Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- Pipit Mutiara Jaya. PT, Indonesia
- Central Electricity Authority - India
- Holcim Trading Pte Ltd - Singapore
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Port Waratah Coal Services - Australia
- Pendopo Energi Batubara - Indonesia
- Energy Link Ltd, New Zealand
- PNOC Exploration Corporation - Philippines
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- Larsen & Toubro Limited - India
- Miang Besar Coal Terminal - Indonesia
- Rio Tinto Coal - Australia
- Bhushan Steel Limited - India
- San Jose City I Power Corp, Philippines
- Eastern Coal Council - USA
- Chettinad Cement Corporation Ltd - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Alfred C Toepfer International GmbH - Germany
- PowerSource Philippines DevCo
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- LBH Netherlands Bv - Netherlands
- Ministry of Mines - Canada
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Star Paper Mills Limited - India
- IEA Clean Coal Centre - UK
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Antam Resourcindo - Indonesia
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Malabar Cements Ltd - India
- Uttam Galva Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Sindya Power Generating Company Private Ltd
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Medco Energi Mining Internasional
- Semirara Mining and Power Corporation, Philippines
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Planning Commission, India
- The State Trading Corporation of India Ltd
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Meenaskhi Energy Private Limited - India
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Bukit Baiduri Energy - Indonesia
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Anglo American - United Kingdom
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Chamber of Mines of South Africa
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Posco Energy - South Korea
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Georgia Ports Authority, United States
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Jorong Barutama Greston.PT - Indonesia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- The Treasury - Australian Government
- Standard Chartered Bank - UAE
- Edison Trading Spa - Italy
- Power Finance Corporation Ltd., India
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Economic Council, Georgia
- Rashtriya Ispat Nigam Limited - India
- McConnell Dowell - Australia
- Indo Tambangraya Megah - Indonesia
- Minerals Council of Australia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Generating Authority of Thailand
- PetroVietnam Power Coal Import and Supply Company
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kumho Petrochemical, South Korea
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Jaiprakash Power Ventures ltd
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
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