REPORT: Coal Production in NSW on the Rise
Good news for coal mining companies in New South Wales– domestic coal production has increased by 5.7 percent over the past year despite weak prices for the black gold, according to a new report.
The statistics by Coal Services shows coal production in NSW has grown from 185 million tons to more than 196 million tons from 2013-2014.
Major export hubs have also grown as coal exports to China have ascended by roughly 26 percent. The China Coal Industry Association reports that more than two thirds of Chinese coal mining companies are operating at a loss.
“The old self-sufficient China has turned into one that is vulnerable, and dependent on imports,” said economist Lord King.
Export volumes to other major markets such as Taiwan, Japan and South Korea have also increased. Exports rose 15 percent for Taiwan, 4 percent for Japan and 9 percent for South Korea.
“This growth in production and the volume of coal exported is a good sign for economic growth in NSW,” NSW Minerals Council CEO Stephen Galilee said.
“These figures show demand is still strong.”
The International Energy Agency (IEA) estimates global electricity could double between 2009 and 2035 as more people in developing countries gain access to electricity and household energy consumption grows.
Over the next five years coal is slated to meet more of the increase in global demand than oil and gas.
“The NSW coal industry is well placed to make the most of this demand,” Galilee stated.
“So while the local industry is experiencing short-term challenges, the long term prospects are good, provided we can continue to meet the future demand.”
Copper, iron ore surge as Chinese investors unleash demand
The reopening of major industrial economies is sparking a surge across commodities markets from corn to lumber, with tin climbing above $30,000 a tonne for the first time since 2011 on Thursday.
In the wake of mounting evidence of inflation fuelled by higher raw materials prices, investors are also increasingly focused on when the U.S. Federal Reserve might start throttling back its emergency support.
Many banks say the rally has further to run, particularly for copper, which will benefit from rising investment in new energy sectors. Copper is at the highest in a decade, fueling bets it will rally further to take out the record set in February 2011. Steel demand is surging as economies chart a path back to growth just as the world’s biggest miners have been hampered by operational issues, tightening ore supply.
“The long-term prospects for metals prices are ‘too good’ and point to higher prices in the next few years,” said Commerzbank AG analyst Daniel Briesemann. “The decarbonization trends in many countries, which include switching to electric vehicles and expanding wind and solar power, are likely to generate additional demand for metals.”
Trading house Trafigura Group and several major Wall Street banks including Goldman Sachs Group Inc. and Bank of America Corp. expect copper to extend gains.
Copper rose as much as 1.6% to $10,108.50 a ton on the London Metal Exchange before trading at $10,080 as of 4:07 p.m. in London.
Benchmark spot iron ore prices rose to a record, while futures in Singapore and China climbed.
The boom comes as China’s steelmakers keep output rates above 1 billion tons a year, despite a swath of production curbs aimed at reducing carbon emissions and reining in supply. Instead, those measures have boosted steel prices and profitability at mills, allowing them to better accommodate higher iron ore costs.
Spot iron ore with 62% content hit $201.15 a ton on Thursday, according to Mysteel. Futures in Singapore jumped as much as 5.1% to $196.40 a ton, the highest since contracts were launched in 2013. In Dalian, prices closed 8.8% higher.
Erik Hedborg, Principal Analyst, Steel at CRU Group commented: “Recent production cuts in Tangshan have boosted demand for higher-quality ore and prompted mills to build iron ore inventories as their margins are on the rise. Iron ore producers are enjoying exceptionally high margins as well, around two thirds of seaborne supply only require prices of $50 /dmt to break even.”
Still, some analysts including Commerzbank’s Briesemann expect a short-term correction as metals become detached from fundamentals. There’s also a risk that China could engage in policies that may cool demand for iron ore and copper.
The metals rally has boosted concerns about short-term Chinese demand. Some manufacturers and end-users have been slowing production or pushing back delivery times after costs surged, while weaker-than-expected domestic consumption has opened the arbitrage window for exports.
Tin climbed as much as 2% to $30,280 a ton on the LME, boosted by rising orders for the soldering metal. Tin is at the highest since May 2011, with a 48% gain this year making it the best performing metal on the LME.