COAL – PRICES

Quarterly coal deals are dead, buried: BHP

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Original article by Peter Ker
The Australian Financial Review – Page: 26 : 8-May-18

BHP Billiton executive Arnoud Balhuizen says coal producers and buyers are unlikely to return to the quarterly contract pricing system. The shift away from the traditional pricing system gained momentum in mid-2017 when coking coal buyer Nippon Steel commenced a trial of a new system whereby contract prices were determined on the basis of the average spot price over the previous three months. Meanwhile, Balhuizen believes that the rise in the price of higher-grade coal and iron ore is likely to be structural rather than cyclical.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, NIPPON STEEL AND SUMITOMO METAL CORPORATION, MITSUBISHI CORPORATION

New threat to power supply

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Original article by Mark Ludlow, Angela Macdonald-Smith
The Australian Financial Review – Page: 1 & 6 : 20-Sep-17

Consumers and businesses face further electricity price rises as operators of coal-fired power plants in New South Wales are having to pay higher prices for coal under new supply contracts. NSW power stations’ coal usage has also risen sharply in the wake of the closure of the Hazelwood plant in Victoria, while the state’s coal mines are struggling to meet demand as 80 per cent of their output is exported. Limited capacity on the NSW rail freight network is also a challenge for power generators, while there is an ongoing industrial dispute at Glencore’s coal mines.

CORPORATES
GLENCORE PLC, CONSTRUCTION, FORESTRY, MINING AND ENERGY UNION OF AUSTRALIA, AUSTRALIAN ENERGY MARKET OPERATOR LIMITED, AGL ENERGY LIMITED – ASX AGL, ENERGYAUSTRALIA PTY LTD, DELTA ELECTRICITY AUSTRALIA PTY LTD, AUSTRALIAN ENERGY COUNCIL

BHP upbeat on ore, coal price outlook

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Original article by Matt Chambers
The Australian – Page: 18 : 4-Sep-17

The latest financial results of BHP Billiton and Rio Tinto were boosted by the rise in iron ore and coal prices. BHP’s chief commercial officer Arnoud Balhuizen says the resources giant expects the price of iron ore to remain strong until at least the end of 2017, while the price of coking coal could potentially be sustained beyond 2017. Meanwhile, the outlook for Fortescue Metals Group will be heavily influenced by Chinese steel mills’ demand for higher-grade iron ore. The price gap between benchmark iron ore and the 58 per cent iron ore produced by Fortescue has widened to more than $US20 per tonne.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES

Analysts trim commodity forecasts, examine mining

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Original article by Myriam Robin
The Australian Financial Review – Page: 20 : 10-Jul-17

The iron ore price was trading above $US62 per tonne on 7 July 2017, but the latest forecasts from Australia’s Department of Industry, Innovation & Science suggest that it could test $US48 by 2018. The Department says the price of copper could fall by 4.1 per cent in 2018, while it expects metallurgical coal to fall by 28 per cent to $US137 a tonne in 2018. Capital Economics also forecasts that the iron ore price will fall, and UBS has downgraded its forecast for the copper price in 2017-18.

CORPORATES
AUSTRALIA. DEPT OF INDUSTRY, INNOVATION AND SCIENCE, CAPITAL ECONOMICS LIMITED, UBS HOLDINGS PTY LTD, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, T ROWE PRICE GROUP INCORPORATED

Quarterly coal contract system to ‘fall over’

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Original article by Julie-anne Sprague
The Australian Financial Review – Page: 25 : 8-Jun-17

There is growing expectation that Japanese coal buyers will abandon the traditional quarterly contract price system in favour of one based on the spot price. Wesfarmers’ incoming CEO Rob Scott believes that Japan’s steel mills could opt for a new pricing system within weeks. BHP Billiton’s chief commercial officer, Arnoud Balhuizen, also recently flagged a shift away from contract pricing. Meanwhile, Scott has indicated that the sale of Wesfarmers’ coal assets is still on the agenda.

CORPORATES
WESFARMERS LIMITED – ASX WES, BHP BILLITON LIMITED – ASX BHP, THE MELBOURNE MINING CLUB, STANWELL CORPORATION LIMITED

Premium paid widens for top quality coal

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Original article by Peter Ker
The Australian Financial Review – Page: 18 : 16-Dec-16

The contract price for semi-soft coking has been settled at $US171 per tonne for the March 2017 quarter, which is 32 per cent higher than the current contract price. Meanwhile, buyers will pay $US180 per tonne for pulverised coal injection (PCI), which is an increase of 35 per cent. Despite the large rise in contract prices, both commodities are still fetching a significant discount compared with the price of hard coking coal.

CORPORATES
GLENCORE PLC, PEABODY ENERGY CORPORATION, WHITEHAVEN COAL LIMITED – ASX WHC, YANCOAL AUSTRALIA LIMITED – ASX YAL, STANMORE COAL LIMITED – ASX SMR, RIO TINTO LIMITED – ASX RIO, ANGLO AMERICAN PLC, SHAW AND PARTNERS LIMITED, IHS MARKIT

Price jump agreed for coking coal

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 16 : 14-Dec-16

The contract price for premium hard coking coal has been settled at $US285 per tonne for the March 2017 quarter, compared with a contract price of $US200 per tonne in the final quarter of 2016. There has been a sharp rise in the price of coking coal in 2016, and the contract price was below $US81 per tonne in the March quarter. Meanwhile, Marian Hookham of IHS Markit says producers of pulverised coal injection (PCI) coal hope to secure a contract price of about $US190 per tonne for the first quarter of 2017.

CORPORATES
IHS MARKIT, GLENCORE PLC, NIPPON STEEL AND SUMITOMO METAL CORPORATION, BHP BILLITON LIMITED – ASX BHP, MITSUBISHI CORPORATION, ANGLO AMERICAN PLC, TECK CORPORATION

Iron, coal rebound to lift rates

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Original article by David Rogers, Barry FitzGerald
The Australian – Page: 19 & 22 : 29-Nov-16

Coal and iron ore are currently trading at prices that are significantly above the forecasts made in the Australian Government’s May 2016 Budget. Based on current prices, the nation’s export earnings in 2016 will be about $A80bn higher than in 2015. Tim Toohey of Goldman Sachs says this should be sufficient to avert the risk of Australia’s credit rating being downgraded. Financial markets believe that there is also now a better-than-even chance of an increase in the cash rate by the end of 2017.

CORPORATES
GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, RESERVE BANK OF AUSTRALIA, AUSTRALIAN NATIONAL UNIVERSITY, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, BLOOMBERG LP

BHP upbeat on China iron, coal demand

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Original article by Matt Chambers
The Australian – Page: 19 & 20 : 18-Nov-16

Malcolm Broomhead, Carolyn Hewson and Lindsay Maxsted are said to be the leading internal contenders to succeed BHP Billiton chairman Jac Nasser, who intends to step down by mid-2017. Meanwhile, CEO Andrew Mackenzie says demand for Australian iron ore and coal has been boosted by the Chinese Government’s efforts to make its steel mills and coal mines more efficient. However, he adds that BHP is taking the view that a likely increase in global supply means the current price of iron ore will not be sustained. In contrast, Deutsche Bank has lifted its forecast for the iron ore price by 21 per cent in 2017, to $US55 per tonne.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, DEUTSCHE BANK AG, AUSTRALIAN LABOR PARTY

Coal contract prices expected to stay high

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Original article by Peter Ker
The Australian Financial Review – Page: 15 & 20 : 9-Nov-16

The spot price of premium hard coking coal has risen to more than $US289 per tonne in early November 2016. Coal producers and buyers recently settled on a contract price of $US200/tonne for the December quarter. Whitehaven Coal CEO Paul Flynn says the spike in the spot price should ensure that contract prices rise again in the March 2017 quarter. He also anticipates a rise in the price of thermal and semi-soft coking coal.

CORPORATES
WHITEHAVEN COAL LIMITED – ASX WHC, MACQUARIE GROUP LIMITED – ASX MQG, GLENCORE PLC