Thermal coal crash deepens

The thermal coal crash driven by falling Chinese imports just keeps getting deeper, via the AFR:

Billions of dollars worth of Australian coal projects are under threat as slumping prices render about 19 per cent of the world’s existing seaborne thermal coal supply loss-making.

Adani’s Carmichael and Whitehaven’s Vickery mine projects were lucrative proposals in mid-2018 when thermal coal prices soared to six-year highs, and while both companies remain confident, analysts say a sharp slump in prices has challenged the projects’ viability.

Energy consultancy Wood Mackenzie said top-quality thermal coal from Newcastle (coal with energy content above 6000 kilocalories per kilogram) had almost halved in price since August 2018 to be fetching about $US65 per tonne last week.

We’re going back to the lows:

It’s removed 5% from the Aussie terms of trade so far. Coking coal is still hovering around $150, having removed roughly another 5%. These incomes shocks will take time to filter into the economy because most coal is till sold on price average contracts.

David Llewellyn-Smith
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