A really important announcement today in China on peak coal use.
http://www.smh.com.au/business/carb...-flags-peak-in-coal-usage-20130206-2dxrv.html
http://www.smh.com.au/business/carb...-flags-peak-in-coal-usage-20130206-2dxrv.html
Peak coal use
- Thread starter mattnz
- Start date
I alluded to this in December when people were asking about buying in towns that were benefitting from coal projects.
Pretty uncertain times!
Pretty uncertain times!
"And it would trigger a negative income shock to Australia, the world’s biggest exporter or coal and iron ore, with significant implications for government budget forecasts."
how much growth was the govt forecasting?? I reckon to have got it to these levels and then stabilise is pretty good. holding onto sales at this volume would hardly be an income shock? then it goes on to say its only $3bn anyway. this is all assuming it comes to pass.
how much growth was the govt forecasting?? I reckon to have got it to these levels and then stabilise is pretty good. holding onto sales at this volume would hardly be an income shock? then it goes on to say its only $3bn anyway. this is all assuming it comes to pass.
that's a SHOCK..... like your overtime bonus going from double time and a half, to double time.
yeah - huge loss, that one.
yeah - huge loss, that one.
Ben please stop alluding and tell us what you know...
I don't know anything, just read what's available to everyone and think how it could affect certain industries.
Stability may not imply expansion but just constant growth?
I am just wondering what alternatives are required, think about it? I think the most feasible would be nuclear for such enormous supply.
Perhaps that would be the next industry for Australia in the long term....otherwise their standard of living would be compromised. Somehow it is all easier said than done, but nonetheless, interesting times ahead....
I am just wondering what alternatives are required, think about it? I think the most feasible would be nuclear for such enormous supply.
Perhaps that would be the next industry for Australia in the long term....otherwise their standard of living would be compromised. Somehow it is all easier said than done, but nonetheless, interesting times ahead....
relax....
http://www.smh.com.au/business/australian-doubt-on-coal-target-20130206-2dyq4.html
''There's a long way to go before [China's] coal demand peaks. It's certainly not going to peak in this five-year plan.''
http://www.smh.com.au/business/australian-doubt-on-coal-target-20130206-2dyq4.html
''There's a long way to go before [China's] coal demand peaks. It's certainly not going to peak in this five-year plan.''
Yes, it was my way of thinking, it's easier said and done on paper and theory than put into practice, right? We'll live and see....
Yes but the market operates on expectations in the future, not what happens today. So it is important.
.
I thought the completion of the 3 Gorges Dam may have been a factor for the coal limitations, but after reading a little from the link below I guess that can be ruled out.
.
The dam was expected to provide 10% of China's power. However, electricity demand has increased more quickly than previously projected. Even fully operational, on average, it supports only about 1.7% of electricity demand in China in the year of 2011, when the Chinese electricity demand reached 4692.8 TWh
.
http://en.wikipedia.org/wiki/Three_Gorges_Dam
.
I thought the completion of the 3 Gorges Dam may have been a factor for the coal limitations, but after reading a little from the link below I guess that can be ruled out.
.
The dam was expected to provide 10% of China's power. However, electricity demand has increased more quickly than previously projected. Even fully operational, on average, it supports only about 1.7% of electricity demand in China in the year of 2011, when the Chinese electricity demand reached 4692.8 TWh
.
http://en.wikipedia.org/wiki/Three_Gorges_Dam
.
Actually, Bloomberg just reported that India will be self-sufficient in 5 years
http://www.bloomberg.com/news/2013-...lion-rail-to-end-imports-corporate-india.html
My understanding is that these commodities are sold under two different types of contracts.
One 'market' has fixed term contracts and agreed prices. These form the bulk of the volumes bought and sold.
The other type of 'market' is the spot market, which caters for product that hasn't found a home yet. It come from excess production over and above what they have agreed to supply, it could be minor players not able to enter into large supply contracts and quite a few other scenarios. These form the minority of volume.
When you say "the market".....I presume you mean the second minor spot market.
I haven't personally witnessed the contracts, but I'm pretty sure the likes of BHP and Rio and HPPL and FMG and Atlas and all of the coal boys over east don't go spending billions digging up mountains without supply contracts being locked away.
Could be wrong, but I doubt it.
Once again, I think it's probably a case of a wet behind the ears 24 yo jouralist having a drama queen moment and no-one actually in the industry bothered to respond, cos they've done it sooooo many times before, and it hasn't made a jot of difference.
The next drama queen journalist will be along any tick of the clock.
A few things:
- FMG and Atlas do not sell coal
- Different commodities are sold differently
- Thermal coal is mostly sold on long (20+yr) term contracts domestically. This is where someone builds a power station and wants certainty of supply from the coal mine next door. Internationally it's more short term because there is an international market but there are long term international contracts as well, depending on the situation.
- Natural gas is sold on longggg term contracts (30+yr) with price and volume set from the beginning because of the massive cost of setting up a hydrocarbons project requires a high degree of certainty from bankers et al that you can sell enough of the stuff at the right price to get your money back. All you need to start a coal mine by comparison is some earthmoving equipment, which can be leased if necessary.
- Metallurgical (coking) coal is sold by contract but the price is set quarterly these days (4 times per year), even if the volumes are locked in. Of course price is everything and the spot market plays an important part of setting these quarterly prices.
- Iron ore used to be sold on longish term contracts but the current situation is best described by the RBA:
The reality here is that long term pricing always lagged spot pricing so BHP, Rio et al decided to keep shortening contract durations, just in time to see the price situation reverse.
The vast bulk of Australia's current exports (coking coal and iron ore) are therefore open to price resets four times a year. Hope this helps.
- FMG and Atlas do not sell coal
- Different commodities are sold differently
- Thermal coal is mostly sold on long (20+yr) term contracts domestically. This is where someone builds a power station and wants certainty of supply from the coal mine next door. Internationally it's more short term because there is an international market but there are long term international contracts as well, depending on the situation.
- Natural gas is sold on longggg term contracts (30+yr) with price and volume set from the beginning because of the massive cost of setting up a hydrocarbons project requires a high degree of certainty from bankers et al that you can sell enough of the stuff at the right price to get your money back. All you need to start a coal mine by comparison is some earthmoving equipment, which can be leased if necessary.
- Metallurgical (coking) coal is sold by contract but the price is set quarterly these days (4 times per year), even if the volumes are locked in. Of course price is everything and the spot market plays an important part of setting these quarterly prices.
- Iron ore used to be sold on longish term contracts but the current situation is best described by the RBA:
The reality here is that long term pricing always lagged spot pricing so BHP, Rio et al decided to keep shortening contract durations, just in time to see the price situation reverse.
The vast bulk of Australia's current exports (coking coal and iron ore) are therefore open to price resets four times a year. Hope this helps.
My comments were regarding both iron ore and coal, not just coal, hence why I included FMG and Atlas in the mix.....
In hindsight, mentioning individual companies was a mistake, as it only opened the door for pedants to do what they do.
....and yes, I realise the thread specifically mentions coal only in the title.
In hindsight, mentioning individual companies was a mistake, as it only opened the door for pedants to do what they do.
....and yes, I realise the thread specifically mentions coal only in the title.
