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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, 15 July 20
MARKET INSIGHT - INTERMODAL
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
Friday, 10 July 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 ...
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- Ceylon Electricity Board - Sri Lanka
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Edison Trading Spa - Italy
- Iligan Light & Power Inc, Philippines
- Salva Resources Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Electricity Generating Authority of Thailand
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Holcim Trading Pte Ltd - Singapore
- Borneo Indobara - Indonesia
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- International Coal Ventures Pvt Ltd - India
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- Toyota Tsusho Corporation, Japan
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Renaissance Capital - South Africa
- Chettinad Cement Corporation Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Eastern Energy - Thailand
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Videocon Industries ltd - India
- CNBM International Corporation - China
- Planning Commission, India
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Oldendorff Carriers - Singapore
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Trasteel International SA, Italy
- Parliament of New Zealand
- PowerSource Philippines DevCo
- Simpson Spence & Young - Indonesia
- Thai Mozambique Logistica
- Dalmia Cement Bharat India
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Coastal Gujarat Power Limited - India
- Bharathi Cement Corporation - India
- London Commodity Brokers - England
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Essar Steel Hazira Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Indonesian Coal Mining Association
- Port Waratah Coal Services - Australia
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Rio Tinto Coal - Australia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Mjunction Services Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Energy Link Ltd, New Zealand
- Bukit Baiduri Energy - Indonesia
- GMR Energy Limited - India
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Meenaskhi Energy Private Limited - India
- Parry Sugars Refinery, India
- Kaltim Prima Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Australian Coal Association
- Aditya Birla Group - India
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bangladesh Power Developement Board
- Maharashtra Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Economic Council, Georgia
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- Price Waterhouse Coopers - Russia
- LBH Netherlands Bv - Netherlands
- Altura Mining Limited, Indonesia
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Heidelberg Cement - Germany
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Independent Power Producers Association of India
- Jaiprakash Power Ventures ltd
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Sojitz Corporation - Japan
- Samtan Co., Ltd - South Korea
- IHS Mccloskey Coal Group - USA
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Banpu Public Company Limited - Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement - Thailand
- Aboitiz Power Corporation - Philippines
- Cement Manufacturers Association - India
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Uttam Galva Steels Limited - India
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- India Bulls Power Limited - India
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- The University of Queensland
- Wood Mackenzie - Singapore
- PTC India Limited - India
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- New Zealand Coal & Carbon
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- VISA Power Limited - India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
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