From the AFR:
Mr Glasenberg went to lengths on Tuesday to position himself as a superior marketing manager to his counterpart at Rio Tinto and the other iron ore majors, which continue to pump tonnes into a heavily depressed market and push down prices.
Glencore is slashing its annual Australian coal production by 15 million tonnes, or about 15 per cent.
Mr Glasenberg stressed the tonnes Glencore was withholding were profit making, and dismissed the argument – used by the iron ore majors – that if you withhold supply, your competitors will simply fill the gap.
Let’s see, then, is Glencore slashing supply? 15 million tonnes represents 16% of Glencore’s projected Australian output and 6% of total Australian exports. 15mt is roughly 1.4 of the global traded coal market.
The cuts can do the market balance no harm though change little longer term. Glencore is the largest thermal coal producer in the world. But it was scheduled to open the 13mt Clermont mine in QLD this year so this is actually just cutting back expansion and may simply be some recycling from old and less efficient mines.
Any implications? Prices have been falling for the past few days and are back to $64 per tonne after the recent rally:
With China near or past peak coal, my view is that thermal will keep falling through the $50s over time. Especially so if the QLD communists get their Indian boondoggle up.
In terms of comparison with iron ore, that’s sketchy. Much of the thermal coal expansion phase is done. In iron ore it’s only just started and RIO/BHP are only about one third of it anyway.
RIO and BHP are right, if they don’t do it, someone else will.
