SUPPLY AND DEMAND

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

Producers spot better returns

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Original article by Matt Chambers
The Australian – Page: 21 : 6-Dec-16

Data from EnergyQuest shows that the spot price of gas in Adelaide rose to nearly $A10 per gigajoule in the September 2016 quarter, while the spot price in Sydney and Brisbane also rose. In contrast, the LNG netback price at the Wallumbilla processing hub in Queensland fell to around $A6 per gigajoule. EnergyQuest expects LNG producers to capitalise on the rise in gas prices by redirecting more of their output to the domestic market.

CORPORATES
ENERGYQUEST PTY LTD, QUEENSLAND CURTIS LNG PTY LTD, ROYAL DUTCH SHELL PLC

Airbnb popularity with landlords puts squeeze on rental market

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Original article by Misa Han
The Australian Financial Review – Page: 3 : 28-Nov-16

The number of homes in Sydney’s central and eastern suburbs that are listed as short-stay accommodation on Airbnb now significantly exceeds the number of residential properties that are available to rent. Data from the University of Sydney’s Urban Housing Lab also shows that property owners can earn significantly more each month by letting their homes via Airbnb rather than seeking longer-term rental tenants.

CORPORATES
AIRBNB AUSTRALIA PTY LTD, UNIVERSITY OF SYDNEY, HEYTOM

Rio iron ore growth slows on China move

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Original article by Peter Ker
The Australian Financial Review – Page: 17 & 23 : 25-Nov-16

Rio Tinto CEO Jean Sebastien Jacques says uncertainty regarding the Chinese Government’s restructuring of state-owned enterprises means that China’s steel production is now unlikely to peak at one billion tonnes per year. He also notes that China’s iron ore production is believed to have risen to between 260 and 270 million tonnes a year, and the supply-demand equation would be significantly changed if China’s annual output reached full capacity of 400 million tonnes. Meanwhile, Rio Tinto may not achieve its annual export target of 360 million tonnes before 2019, although it expects shipments in 2017 to be between 330 million and 340 million tonnes.

CORPORATES
RIO TINTO LIMITED – ASX RIO, VALE SA, UBS HOLDINGS PTY LTD, ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Iron ore futures soar on mill closures

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Original article by Lisa Murray
The Australian Financial Review – Page: 23 : 25-Nov-16

The January 2017 iron ore contract has gained over 17 per cent on the Dalian Commodity Exchange in the last three trading sessions. Futures traders have responded positively to the Chinese Government’s plans to reduce steel production and shut down inefficient steel mills. Analysts note that demand for higher-grade iron ore is rising as steel mills seek to reduce their greenhouse gas emissions. The sharp rise in the price of coking coal has also increased demand for higher-quality iron ore.

CORPORATES
DALIAN COMMODITY EXCHANGE, BAOCHENG FUTURES, THE STEEL INDEX LIMITED, MYSTEEL.COM LIMITED, THE GOLDMAN SACHS GROUP INCORPORATED

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

‘Too far, too fast’ for iron ore upswing

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Original article by Jessica Sier
The Australian Financial Review – Page: 33 : 17-Nov-16

Katana Asset Management’s Romano Sala Tenna says the iron ore price has risen too quickly, and he notes that global supply is likely to increase if the price remains elevated. The pullback in the price of the steel input in mid-November 2016 has followed a rally in the wake of Donald Trump’s presidential election win. China’s Ministry of Industry & Information Technology recently forecast that the nation’s annual production of crude steel will fall to between 750 million and 800 million tonnes by 2020.

CORPORATES
KATANA ASSET MANAGEMENT LIMITED, CHINA. MINISTRY OF INDUSTRY AND INFORMATION TECHNOLOGY, UBS HOLDINGS PTY LTD, CLARKSONS PLATOU SECURITIES, BLOOMBERG WORLD IRON AND STEEL INDEX, REPUBLICAN PARTY (UNITED STATES)

AGL mulls gas import to beat supply crunch

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Original article by Matt Chambers
The Australian – Page: 19 & 22 : 15-Nov-16

The high domestic price of gas in Australia’s southeastern states and supply constraints may prompt AGL Energy to source natural gas from regions such as Asia, Europe or the Middle East. AGL will undertake a feasibility study on the proposal to build an LNG import terminal and processing facility, which would capitalise on a global oversupply of LNG. Shell Australia chairman Andrew Smith put forward a similar suggestion earlier in 2016.

CORPORATES
AGL ENERGY LIMITED – ASX AGL, SHELL COMPANY OF AUSTRALIA LIMITED

Iron ore price set for big fall by mid-2017

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Original article by Brian Robins
The Age – Page: 23 : 21-Oct-16

Iron ore is currently trading at around $US55 per tonne, but Fortescue Metals Group CEO Nev Power says the price is likely to fall in 2017 due to a looming increase in global supply. Power says the market has priced in the additional supply from the Roy Hill mine in Western Australia and the commencement of production at Vale’s S11D project. This will offset an expected downturn in iron ore production in China.

CORPORATES
FORTESCUE METALS GROUP LIMITED – ASX FMG, ROY HILL HOLDINGS PTY LTD, VALE SA, RIO TINTO LIMITED – ASX RIO, BHP BILLITON LIMITED – ASX BHP