COAL – PRICES

Coal, iron ore budget windfall

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Original article by Matt Chambers
The Australian – Page: 19 & 32 : 3-Nov-16

The rally in the price of iron ore, coking coal and thermal coal is expected to boost the 2016-17 revenue of the Federal Government and mining states. It is estimated that tax revenue and mining royalties could be around $A12bn higher than the Federal Government and its counterparts in Western Australia, New South Wales and Queensland had forecast. However, this will depend on whether the prices of Australia’s key export commodities remain at around current levels. Macquarie Group expects coal prices to eventually fall, but stresses that the timing of this will depend on Chinese Government policy.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, HSBC AUSTRALIA HOLDINGS PTY LTD, STANDARD AND POOR’S CORPORATION, DEUTSCHE BANK AG, RESERVE BANK OF AUSTRALIA, GLENCORE PLC

Whitehaven ramps up coking coal output

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Original article by Peter Ker
The Australian Financial Review – Page: 13 & 25 : 18-Oct-16

The rise in the price of coking coal has prompted Whitehaven Coal to lift production in the December 2016 quarter and scale back output of thermal coal. The proportion of semi-soft coking coal produced at its Maules Creek mine will rise to 30 per cent during the period. The price of this coal has risen more strongly than thermal coal in 2016, although growth in the price of premium hard coking coal has significantly outpaced both. Peter O’Connor of Shaw & Partners says other miners could move to lift production, which could in turn put pressure on the coking coal price.

CORPORATES
WHITEHAVEN COAL LIMITED – ASX WHC, SHAW AND PARTNERS LIMITED, PRUDENTIAL INVESTMENTS PTY LTD

Surging coal puts pricing system in peril

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Original article by Matt Chambers
The Australian – Page: 17 & 18 : 10-Oct-16

The spot price of Australian coking coal has risen by 155 since early June 2016, to $US213 per tonne. This compares with a contract price of just $US92.50 per tonne for the September quarter. The spike in the spot price has prompted Japanese steel mills to delay the settlement of contract prices for the December quarter. Macquarie notes that there is a growing push to phase out the quarterly contract system in favour of index pricing, although Whitehaven Coal Paul Flynn says this is unlikely to occur in the near-term.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, WHITEHAVEN COAL LIMITED – ASX WHC, NIPPON STEEL AND SUMITOMO METAL CORPORATION, ANGLO AMERICAN PLC, THE STEEL INDEX LIMITED

Morgan Stanley calls coal price peak as controls relax

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Original article by Peter Ker
The Australian Financial Review – Page: 29 : 5-Oct-16

The price of coking coal has risen by 177 per cent in 2016, and the price of thermal coal is up 55 per cent. However, Morgan Stanley believes that the Chinese Government’s move to further ease restrictions on the nation’s coal production may rein in coal prices. Meanwhile, the Singapore Exchange’s Adrian Lunt says the large difference between the contract price for coking coal in the September quarter and the spot price may prompt more producers to abandon quarterly pricing in favour of index-linked pricing.

CORPORATES
MORGAN STANLEY AUSTRALIA LIMITED, SINGAPORE EXCHANGE LIMITED, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, WHITEHAVEN COAL LIMITED – ASX WHC, STANMORE COAL LIMITED – ASX SMR, NEW HOPE COAL AUSTRALIA, AUSTRALIAN PACIFIC COAL LIMITED – ASX AQC, GLENCORE PLC, ANGLO AMERICAN PLC, TECK CORPORATION

Savvy mine buyers benefit from coal price lift

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Original article by Peter Ker
The Australian Financial Review – Page: 27 : 9-Sep-16

The price of coking coal has risen 47 per cent in the last month, and 105 per cent so far in 2016. Macquarie Group notes that only 510,000 tonnes of coking coal has been traded via the globalCOAL platform in the last month, and it says the low volumes have been a major driver of the spot price in recent weeks. The spot price is currently significantly higher than the contract price, which has benefited major spot price traders such as BHP Billiton.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, BHP BILLITON LIMITED – ASX BHP, GLOBAL COAL LIMITED, STANMORE COAL LIMITED – ASX SMR, VALE SA, TAURUS FUNDS MANAGEMENT PTY LTD, ANGLO AMERICAN PLC, AUSTRALIAN PACIFIC COAL LIMITED – ASX AQC, COLONIAL FIRST STATE GLOBAL ASSET MANAGEMENT

Treasury’s medium-term price forecast paints unsettling picture

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Original article by Geoff Winestock
The Australian Financial Review – Page: B13 : 4-May-16

The Australian Government’s May 2016 Budget forecasts include a 1.35 per cent increase in the nation’s terms of trade in 2016-17. The Mid-Year Economic and Fiscal Outlook had forecast a 2.25 per cent decline in the terms of trade. Meanwhile, the Treasury has upgraded its forecast for the iron ore price in 2017 from $US39 per tonne to $US55. The price of metallurgical coal has been upgraded from $US73 per tonne to $US91.

CORPORATES
AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIAN LABOR PARTY

Japanese buyers demand cheaper Australian coal

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Original article by Peter Ker
The Australian Financial Review – Page: 1 & 11 : 5-Apr-16

The downturn in coal prices and a global oversupply is expected to result in Japan’s power companies securing a lower contract price in current negotiations with Australian thermal coal producers. The annual contract price is usually higher than the spot price, but the utilities are believed to be seeking a discount of at least 10 per cent on the previous contract price of about $US67 per tonne. RBC Capital Markets forecasts that the thermal coal price will rebound to around $US65/tonne in 2018.

CORPORATES
RBC CAPITAL MARKETS, IHS GLOBAL INSIGHT INCORPORATED, RIO TINTO LIMITED – ASX RIO, GLENCORE PLC, TOHOKU ELECTRIC POWER CORPORATION, ADANI ENTERPRISES LIMITED, ROY HILL HOLDINGS PTY LTD, AUSTRALIA. EXPORT FINANCE AND INSURANCE CORPORATION, ANGLO AMERICAN PLC, TAURUS FUNDS MANAGEMENT PTY LTD, STANMORE COAL LIMITED – ASX SMR, VALE SA, SUMITOMO CORPORATION

BHP coalmine on the brink as profits dive

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Original article by Matt Chambers
The Australian – Page: 18 : 29-Feb-16

BHP Billiton’s Mount Arthur mine in New South Wales currently produces about 10 per cent of the thermal coal that is exported from Australia each year. However, BHP CEO Andrew Mackenzie recently signalled that production at the mine could potentially be suspended unless there is a rebound in the coal price. The price of thermal coal was trading at almost $US150 per tonne in 2011, but Goldman Sachs recently forecast that it will average just $US48/tonne in 2016.

CORPORATES
BHP BILLITON LIMITED – ASX BHP, GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, SOUTH32 LIMITED – ASX S32

Carbon capture key to coal future: IEA

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Original article by Matt Chambers
The Australian – Page: 16 : 21-Dec-15

The International ­Energy Agency (IEA) forecasts that India’s growing demand for coal will enable Australia to reclaim its status as the largest coal exporter. Meanwhile, IEA executive director Fatih Birol warns that a sustained upturn in coal prices will require coal producers to ramp up their investment in ­carbon capture and storage technology. He adds that carbon sequestration will be essential in meeting the Paris climate change summit’s targets for limiting growth in global warming.

CORPORATES
INTERNATIONAL ENERGY AGENCY, AUSTRALIA. DEPT OF THE PRIME MINISTER AND CABINET, ADANI ENTERPRISES LIMITED, HANCOCK PROSPECTING PTY LTD

China mining boom last in history

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Original article by Peter Ker
The Australian Financial Review – Page: 10 : 11-Nov-15

Australian economist Saul Eslake has warned that the prices of many industrial commodities are likely to fall further in the next year or two. Eslake is particularly bearish about the outlook for the price of coal and iron ore. Eslake also told the International Mining and Resources Conference that there is unlikely to be another commodities boom on the scale of the one that was driven by China’s industrialisation. He argues that other developing countries have significantly smaller populations and are less dependent on commodity imports.

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ