In recent days we seen a number cross-currents in the bulk commodities. On the positive half of the ledger, the spot iron price (white) and 12 month swaps have based (yellow) , as have Chinese steel prices (purple and green). The recovery is quite muted as this point, no doubt reflecting generally weak global economic conditions weighing on a clear shift to stimulate in China. Coking coal too has been stable just under $220. But thermal coal (red) continues to tank, down another 5% last week to $84.81. Thermal coal was a key driver in Australia’s terms of trade boom through 2007/8 and it is still historically very elevated:
Some of the slide is because of weak Asian demand, but its also because of increased coal and LNG supply. There a lesson here for all the bulks in the future.
