From the ANZ today:
Thermal coal prices gained, while coking coal prices declined to USD148/t. China coal import data showed thermal coal imports rose 25% to 16mt in March, with most of the gains in imports from Indonesia. Reports suggest Australia lost some of its market share to Indonesia as a supplier of high rank coal last month. China’s coking coal imports declined about 14% to 4.6mt in March, with most of the declines owing to a 28% drop in Australia’s exports to China. Mongolia’s exports improved slightly, also weighing on Australian FOB coking coal prices. In iron ore markets, prices were unchanged around USD138/t.
Here is the coking coal price, down 15% in two months and very close to its big dump low of late last year.
Coking coal represents some 12% of Australia’s terms of trade. Thermal coal another 7% and its contracts recently fell 17%. Gold is another 5-7% or so and it recently fell 15%. Iron ore is almost 25% of the ToT and has fallen 15% from February highs.
In short, on the back of the envelope the past two months has seen over 50 % of Australia’s terms of trade have been hit by about 10%.
There are lags on contract pricing here that will spread this out but a 5% fall in the terms of trade is not small bikkies and beyond the March QTR will not help profits, government receipts, national income or anything else in the economy. It effectively wipes out the bulk commodity bounce we enjoyed after last September’s fall and in the circumstances of a looming mining bust, it could be a rate cut trigger sooner rather than later.
If not May, June’s got to be live.