Coking Coal

An article originally posted by Kruiser on the NAE thread.

http://www.theaustralian.com.au/bus...king-coal-prices/story-e6frg8zx-1227055814372

Miners cheered by bullish outlook for coking coal prices
COKING coal is emerging as a bright spot for miners still reeling from price crunches in iron ore and thermal coal. Like iron ore and thermal coal, prices for coking coal — Australia’s second-biggest mineral export earner — have been hard hit this year, falling by 24 per to $US113.50 a tonne on a spot basis. But the call has gone out that prices have bottomed and are set to bounce back to between $US130 and $US150 a tonne in the near term, and $US170 a tonne in the longer term A $US20 a tonne price improvement would deliver the local industry a much-needed $US3.5 billion annual revenue boost, and a $US40 a tonne price improvement an even more welcome $US7bn lift. Demand and prices for coking coal are linked to global steel production levels. Unlike iron ore, coking coal is not suffering from the huge oversupply that has caused iron ore prices to plunge 38 per cent to $US83.20 a tonne in the past six months. The global industry has also been more willing than the iron ore sector to close unprofitable production, mainly in the US and Australia, the leading seaborne exporter. The commodities desk at Citi has been one of the first to call a bottom in coking coal prices, tipping a rebound in coming months, but with its long-term price expectation trimmed by $US10 to $US170 a tonne. Its short-term bullishness — $US143 a tonne in 2015 and $US152 a tonne in 2016 — is based on a pick-up in Chinese steel demand, announcements of the closure of 14 million tonnes of annual production since April, and a slowdown in new supply growth ASX-listed Tigers Realm Coal, which is planning a low-cost coking coal development in Russia’s east, outlined similar factors for the more buoyant outlook. “We continue to believe that the coking coal price has bottomed and is set for a sustained recovery over the next two years as the market has responded to the low prices by cutting production and shifting it to a balanced position,’’ chief executive Craig Parry said. “We estimate some 25 million tonnes of production cutbacks have been announced globally and there is potential for more cutbacks in China. “With global steel production growing consistently at over 2.5 per cent per annum, the demand is clearly there, and with these cutbacks in place there should be growing price tension in the foreseeable future. “In addition, we are seeing renewed interest from major resource funds in the sector, which suggests a major turnaround in sentiment,’’ Mr Parry said