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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, 02 December 20
MARKET INSIGHT - INTERMODAL
It has been another busy week in the dry bulk secondhand market; a healthy number of sales reported predominantly from Japanese owners while owner& ...
Thursday, 26 November 20
DECLINE IN COAL EXPORTS ADDS TO NAVAJO-OWNED COMPANY'S PROBLEMS - IEEFA U.S.
Weak demand and low prices are likely creating steep losses for NTEC
U.S. coal exports to Asia—once heralded as the saving gra ...
Thursday, 26 November 20
COAL FINANCING QUICKLY DRYING UP WORLDWIDE - ANALYSTS : REUTERS
Financing for coal projects is drying up at ever increasing rates as more countries target zero carbon emissions amid an energy transition sweeping ...
Wednesday, 25 November 20
LIBOR REPLACEMENT AND SHIP FINANCE - WHERE IS IT HEADING? - WFW
The likely replacement of the LIBOR at the end of 2021 creates difficult technical and practical issues for all sectors of business and finance. Th ...
Wednesday, 25 November 20
DRY BULK SHIPPING: CHINA REMAINS THE DRIVING FACTOR, BUT COAL POLICY IS DISRUPTING THE MARKET - PETER SAND, BIMCO
The second half of the year has provided some cheer for the dry bulk market, with all ships in the spot market averaging earnings above the break-e ...
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- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
- Energy Development Corp, Philippines
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Kumho Petrochemical, South Korea
- Coastal Gujarat Power Limited - India
- Planning Commission, India
- Antam Resourcindo - Indonesia
- Globalindo Alam Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Kideco Jaya Agung - Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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- Uttam Galva Steels Limited - India
- Standard Chartered Bank - UAE
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Thai Mozambique Logistica
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Kartika Selabumi Mining - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- Trasteel International SA, Italy
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Attock Cement Pakistan Limited
- Kobexindo Tractors - Indoneisa
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Meralco Power Generation, Philippines
- Anglo American - United Kingdom
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Therma Luzon, Inc, Philippines
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- The State Trading Corporation of India Ltd
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Bukit Baiduri Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Semirara Mining Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Videocon Industries ltd - India
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Power Finance Corporation Ltd., India
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Alfred C Toepfer International GmbH - Germany
- CIMB Investment Bank - Malaysia
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- The University of Queensland
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GMR Energy Limited - India
- India Bulls Power Limited - India
- ASAPP Information Group - India
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Rio Tinto Coal - Australia
- Bhoruka Overseas - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Price Waterhouse Coopers - Russia
- Semirara Mining and Power Corporation, Philippines
- Wilmar Investment Holdings
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Ministry of Mines - Canada
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- VISA Power Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Global Green Power PLC Corporation, Philippines
- White Energy Company Limited
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Electricity Authority, New Zealand
- CNBM International Corporation - China
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Georgia Ports Authority, United States
- GVK Power & Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cement Manufacturers Association - India
- European Bulk Services B.V. - Netherlands
- International Coal Ventures Pvt Ltd - India
- New Zealand Coal & Carbon
- Central Java Power - Indonesia
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Oil Corporation Limited
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parliament of New Zealand
- Iligan Light & Power Inc, Philippines
- Deloitte Consulting - India
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- PowerSource Philippines DevCo
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