December saw a sharp increase in coal exports with volumes from Newcastle at a 4 month high; Dalrymple/ Hay Point at a 6 month high and Gladstone at 1yr high. This jump in volumes brings the total for 2020 to 364mt, down 5% versus 2019 and 3% versus 2018. Exports in Q42020 were down 3.5% versus Q42019, emphasising that the trend remains weak, with the sharp improvement in December volumes likely due to cold winter conditions in Asia; heavy rains in Kalimantan and rising demand out of Japan, South Korea and Taiwan. Closures in the Hebei region in China due to a Covid outbreak has also helped demand for thermal coal.
It’s all about fungibility. No doubt, the coal volumes will fall back as Winter passes but other markets will soak up coal formerly directed to China over time.
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.
