FOCUS - China´s industrialization fuels boom for Australian coal
[do stories like this come at the top? Are we there yet? just asking - mish]
Wednesday, November 10, 2004 2:17:41 AM
afxpress.com
FOCUS - China's industrialization fuels boom for Australian coal SYDNEY (AFX) - Less than two years ago, Australia's coal industry was in such a parlous state, with supply exceeding demand and prices on international markets so low, that many producers wondered how they were going to survive
But, largely because of China's high-intensity industrial development, coal has become black gold, with producers unable to meet demand and confident of achieving record prices in upcoming negotiations with Japanese buyers
Such is the demand for Australia's coal that its railways, coal loaders and ports are struggling to cope with exports which have risen almost 50 pct in seven years and huge container ships are queued outside most of the major coal ports
"It has been an incredibly rapid turnaround from being a very morose industry about a year ago to the situation today with the biggest boom it has ever seen," industry analyst Clyde Henderson said Wednesday
"It's very much a China story. China used to be quite a significant exporter of coal, but it can't keep pace with its own demand and it's now having to import so it is the major driver and it looks like India is going to follow on
"So now we have the two most populous countries in the world both entering a high steel-intensity stage of their development and the Australian coal industry is benefiting." Henderson, director of Sydney-based independent industry forecaster Energy Economics, told Agence France-Presse all parts of the industry were sharing in the boom and in the infrastructure problems, with equipment such as trucks and even explosives in short supply
Coal prices are such that companies are posting big profit increases this year with many keen to cash in on the boom by developing new mines and creating the industry's biggest expansion phase since the 1960s
Already Australia's biggest export worth more than 12 bln usd -- double to value of the next largest export, crude oil -- coal is the fuel which, more than any other export, is fuelling Australia's booming economy
Half the coal goes to Japan, by far Australia's biggest export market and which can expect to pay more this year than it did last year and the previous during negotiations due to start in Tokyo later this month
Henderson believes steaming (or thermal) coal, of which 60 mln tonnes a year are needed by Japan's power stations, will cost at least 50 usd a tonne in the Japanese financial year beginning in April, from 45 usd a tonne in 2004 and 26.75 usd in 2003
Even more expensive coking coal, which is used for steel production, is expected to almost double to more than 100 usd a tonne from 57.50 usd in 2004 and 46.50 usd the previous year
Even more remarkably, say the analysts, the price rises have occurred while the value of the Australian dollar was rising rapidly and forcing up the price of Australian coal to a significant extent
Wilson HTM business director Keith Williams said that while it was certainly a sellers' market likely to continue at least in the short term, producers were divided about how it was going to play out in the medium term
"Some commentators believe there could be an over supply in the next 12 months while on the other hand some are saying infrastructure problems are going to restrict supply for some time to come," Williams told AFP
"But certainly I think from some settlements we hear have already been done in thermal coal it looks like producers will be able to settle around 50 dollar a tonne in the Japanese negotiations," he said
"In terms of coking coal, the widespread opinion is a figure of 100 dollars or more. That's absolutely incredible considering it was half that a couple of years ago." One Queensland-based second-tier producer Macarthur Coal Ltd, which mainly mines pulverized injection coal for use in steel making, reflected the view of many when it complained last month that the infrastructure constraints were limiting its exports
Like many other producers, it has found the limitations affecting the shipment of coal produced in Queensland's Bowen Basin, Australia's largest coal producing region
"Restrictions are expected to continue," the company said in its recently released annual report. "However, management is focused on minimising the impact on customers." |
