The monster coal crash continues with no end in sight.
Coking coal is now trading at $226 down from peaks above a preposterous $600. Thermal coal is at $133 down from peaks around $450.
This is crazy the Ukraine War commodities mania got.
And there is no end in sight.
For thermal coal, $133 is still the highest price ever outside of the Ukraine War. Given the gas glut it is competing with, prices will halve again yet.
For coking coal, the Chinese steel bust coming in H2 is all that matters. I expect another having there as well.
Calculating the impacts on Australia’s terms of trade is difficult owing to price averages and long-term contracts. Before the war, the two coals composed roughly 20% of the ToT. At peak price, it would have been more like 70% based upon spot!
My best guess is that we keep falling until we get somewhere near the 2015 lows:
This is going to gut the WA, QLD, and federal budget revenues, and add enormous deflationary downside to the broader economy as nominal growth craters.
