Considering shipping cost is always a good idea as well as judging the price of coal depending on its calorific content. Because of shipping cost, preferably coal with highest calorific content is shipped around the world. Coal prices based on calorific content can be compared independently on its origin.
What would happen if coal price based on its calorific content including its shipping cost in one region is cheaper than in another? Yes, the buyer will buy in the region with the cheapest price. This assumes of course that quality of both coal sources is suitable for the purpose. Furthermore, speculators or better arbitrageurs could buy on the cheapest market place and sell on the market with highest price if the spread including shipping cost will allow it. And these are two examples of market efficiency. Therefore, a change of coal price in one region is influencing the price in another region under the given limitations. Therefore, any significant change in demand or supply will move coal prices world wide.
The more interesting question is, does the coal price of today influence the share price of PDZ? Logically seen not, because they will start making money with coal in maybe 4 years. PDZ's market value at the time the scoping study was released in April 2014 was 68.7 Mio AUD. Now it is 24.5 Mio AUD. PDZ have made progress in derisking the project and is financially in good condition which logically should increase the value of PDZ. The market judge it in an opposite way. Why? Because of the thinking that a low coal price of today will not change significantly in coming years. We will see.
Good luck
PDZ Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
