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The iron ore rally may be on thin ice but the equally spectacular coal rally has further to run and for exactly the same reasons, from Morgan Stanley:
Note Chinese port stocks for both coals. Thermal especially looks bullish with demand up, Chinese production down and port stocks cratered. This ought to provide some support for the diversifieds once the iron ore pure plays crack lower.
The two coals have roughly one third the weight of iron ore in the terms of trade so this is useful for Australian income.
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About the author
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.
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