A couple of tid-bits from Macquarie today outline the stregnth under the coal rally. For thermal:
Thermal coal: Versus expectations, preliminary trade data released two weeks ago for total coal imports was weak, showing a small sequential decline. Considering the scale of Chinese production cuts that has resulted in a tight domestic market and rising prices, the question was whether this decline was in thermal coal or met coal (or both). The detailed data shows that thermal coal imports continued to rise, now running at their highest level since Dec-14 and at a run rate that is 30% higher than the full-year import in 2015. For as long as Chinese domestic coal production is falling more quickly than domestic consumption (-9% vs. -2% YTD), imports should rise since inventories are low. The debate now is whether Chinese production controls are loosened or circumvented – domestic miners are making positive margins again.
Coking coal may resolve quicker:
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
