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Coal Production Increases On Weaker Australian Dollar

By  +Follow August 23, 2013 10:21AM
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The recent weakness of the Australian dollar is causing an uptick in coal production in the country that appears likely lead to a further increase in surplus, which for 2012 were already tallying at some 20 million tons.

The discovery of massive shale reserves in the US has led to a boom in oil and natural gas production, which has in turn taken a toll on domestic usage of coal as an energy supply. The story is different in rapidly developing countries, however, and Australian producers have been taking advantage of the struggling currency in order to increase output while overhead expenses are low. Indeed, coal shipments from the country are up over 13 percent on a year-over-year basis. According to the financial services firm Macquarie Group Ltd, the 17.6 million tons the country exported in June was a monthly record.

Higher exports have not come without consequences however. Australia’s Newcastle export terminals in New South Wales saw prices drop 10 percent in the same month to $77.75 per ton. Coal prices in Newcastle were down nearly 20 percent overall last year, and July’s average of $76.63 per ton was the lowest since fall of 2009.

Analysts have responded to this situation by reducing forecasts, as Goldman Sachs (GS) and Citigroup (C) both agree that coal prices in 2013 will be lower by around 7 percent. And the industry itself seems to be fully aware of the situation. Yancoal Australia Ltd., a Chinese-run operation, announced in its recently-released mid-year production results that the relatively stable demand that has persisted is being overtaken by growing surplus, as mining companies take advantage of currency conditions to produce more for less before having to contend with inevitable cost cutting measures.

The Australian Coal Association has recently noted that the strength of the Australian dollar in recent years accounts for some 30 percent on higher prices, and says that the industry is 11,000 jobs poorer as a result.

For the time being, however, demand is expected to stay strong enough to support a 7 percent projected increase to 183 million tons exported by the end of the year. Indonesia, the only country that exports more coal than Australia, could see exports up as much as 6 percent. For the time being, the difficult decision to cut output can and will continue to be postponed.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for gs
Ben Silverberg
24 Oct 14 23:05:25
$NCR upgraded post-earnings at $GS from "sell" to "neutral" rating with PT 26.00 up previously from 25.00; closed Friday at 26.39. Go figure
Chat With Traders
24 Oct 14 20:44:43
Awesome, thanks @srcharts. Recently I've just been focusing on a few companies to trade, $GS & a couple Australian ASX stocks. How bout you?
Steve Mahoney
24 Oct 14 18:01:18
@nanexllc Hmmm...I Understand. The Commission and WallStreet models has a LOT of money at Stake. Saw it 1st Hand at a $GS-owned Co in Pgh
Carolyn B Miciano
24 Oct 14 17:12:51
Master the #thinkorswim platform for Options http://t.co/Rnn4SdLnPz $GS $COST $FDX
Jahi Faucette
24 Oct 14 16:30:27
RT @CNBCFastMoney: 19 trades in 67 seconds http://t.co/RR9Sfb9m5P $YHOO $AMZN $MSFT $PG $JPM $XLF $GS $MS $BAC $C $OIH $DAL $SPY & more
Investing Philosophy
24 Oct 14 16:10:46
RT @CNBCFastMoney: FINAL TRADE: Your first move for Monday, Oct. 27 http://t.co/1RNm2XiZuX $EWZ $GS $EWG $MS http://t.co/tMsC4PWCDx
CNBC's Fast Money
24 Oct 14 16:09:45
19 trades in 67 seconds http://t.co/RR9Sfb9m5P $YHOO $AMZN $MSFT $PG $JPM $XLF $GS $MS $BAC $C $OIH $DAL $SPY & more
Bruno J. Navarro
24 Oct 14 16:09:27
Stocks for next week: 19 trades in 67 seconds http://t.co/BuilwWXElH $YHOO $AMZN $MSFT $PG $JPM $XLF $GS $MS $BAC $C $OIH $DAL $SPY
DAN BRIGGS
24 Oct 14 16:06:14
RT @CNBCFastMoney: FINAL TRADE: Your first move for Monday, Oct. 27 http://t.co/1RNm2XiZuX $EWZ $GS $EWG $MS http://t.co/tMsC4PWCDx
CNBC's Fast Money
24 Oct 14 16:05:01
FINAL TRADE: Your first move for Monday, Oct. 27 http://t.co/1RNm2XiZuX $EWZ $GS $EWG $MS http://t.co/tMsC4PWCDx
Bruno J. Navarro
24 Oct 14 16:04:08
Your first trade for Monday, Oct. 27 http://t.co/knuf5WlCEZ $EWZ $GS $EWG $MS
12Stocks.com
24 Oct 14 16:01:30
S&P100 #Stocks Performance $GILD $LLY $MSFT $EXC $MMM $PG $BMY $AEP $UNP $CMCSA $GS $PFE $BK $MRK $EMC $GD more@ http://t.co/n4QZIDxy7w
The Skeptic
24 Oct 14 15:40:38
"Yes I realize this came from another bank, and, no I am not sending this to you to make you feel uncomfortable." lolz $GS $AGN $VRX
HotKeyTrading
24 Oct 14 15:00:12
Insiders Buying: $CSL $TCS $MTG $BHI $LLTC $CACQ $VFC $MYCC $HAS $GS $RARE $HA $PRTA $PEP $OTIC http://t.co/XQITF0lRKD #wallstreet #stock
Carolyn B Miciano
24 Oct 14 14:48:29
Detailed analysis of the ETF market http://t.co/nE0PeukpOK $GS $COST $FDX
James J. Angel
24 Oct 14 14:32:52
My latest comment on W2007 Grace Soap Opera. Mystified why #SEC doesn't order $GS to obey law and file financials. http://t.co/NmvFrtpoEO
Mike Valletutti, CTA
24 Oct 14 14:29:15
$GS highs 189, down to 172 last week, closes 183 this week.
Mike Valletutti, CTA
24 Oct 14 14:27:24
Pete loves $GS (my top holding)
FlowerPower
24 Oct 14 14:27:14
#FastMoneyEspresso FINAL TRADES: Tim Seymour—> buy $EWZ Pete Najarian —> buy $GS Brian Kelly —> sell $EWG Guy Adami —> buy $MS
Stockaholics
24 Oct 14 14:20:56
Our Penny Stock Alerts Gained 371% In 2 weeks! Sign Up For Free Text Alerts For Our New Pick: http://t.co/dLDRavoCi4 $GS $ZION $ISRA
Carolyn B Miciano
24 Oct 14 14:20:24
Killer service for daytrading http://t.co/HMFbp2pHhn $GS $COST $FDX
Divyesh Zahin
24 Oct 14 14:05:53
Who will win in See what $GS economists are predicting.
Leo Kolivakis
24 Oct 14 14:04:45
Special Report: Why Madrid's poor fear Goldman Sachs and Blackstone $GS $BX http://t.co/xrDVysCrO6 via @reuters
Mike Valletutti, CTA
24 Oct 14 14:03:57
Nasdaq and Financials back above 50 day, SP500 is not. $GS $BAC $FB $YHOO
Debbie
24 Oct 14 13:53:58
@DoctorTranRI360 @am_vic I would imagine that $SNY has a relationship with $GS, hence why $MNKD made their coverage list.
Investors Hangout
24 Oct 14 13:47:12
$FB Exchange Click Here: http://t.co/CscDik9KPs Also See: $TRTC $SA $X $GS ~
NASDAQ
24 Oct 14 13:40:41
$GS - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/LGAILXukEp
NASDAQ
24 Oct 14 13:35:25
$GS - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/jTT4GXFH6C
Carolyn B Miciano
24 Oct 14 13:31:09
Why Volume is under-rated in trading http://t.co/oPLTufvfzX $GS $COST $FDX
S. Andrew Musoke
24 Oct 14 13:09:29
RT @GoldmanSachs: $GS Asia President Ken Hitchner welcomes @YaoMing to #GSAM Symposium in HK discussing #leadership on & off the court http…
Debbie
24 Oct 14 13:09:24
@am_vic @DoctorTranRI360 I am glad $GS has $MNKD on their radar. I feel the prices tgt is too low having a big house covering them is good.
12Stocks.com
24 Oct 14 12:59:10
S&P100 #Stocks Performance $GILD $PG $LLY $EXC $MMM $AEP $PFE $MSFT $UNP $BMY $INTC $CMCSA $GS $USB $VZ more@ http://t.co/n4QZIDxy7w
12Stocks.com
24 Oct 14 12:58:54
Dow #Stocks Trend $PG $MMM $TRV $CAT $MSFT $UNH $PFE $INTC $GE $UTX $JNJ $HD $GS $MRK $DIS $NKE $XOM $V $AXP @ http://t.co/TvzJfd0RGT
Kym L
24 Oct 14 12:55:57
$GS this probably won't work either https://t.co/xpcPDp88NG via http://t.co/xwjHFVSbOf
Wanfeng Zhou
24 Oct 14 12:53:25
RT @StockMoo: $gs: Goldman Sachs targets alumni to boost women vice-presidents http://t.co/BAGMxQSoV3
Market Int Center
24 Oct 14 12:50:31
Goldman Sachs $GS Trading Near $177.57 Support Level ( http://t.co/2B8G2ra9qm )
Otto Max Investments
24 Oct 14 12:36:53
Loving $GS's strength. Consistent accumulation. New highs coming. http://t.co/DDksDNFMFB
NASDAQ
24 Oct 14 12:31:03
$GS - Prospectus Filed Pursuant to Rule 424(b)(2) (424b2) http://t.co/iwvIjlvGyI
Brandon Cragun
24 Oct 14 12:21:58
@DougKass @RedDogT3 I bought $GS and $intc long Apple from Monday just in case u 2 were curious :)
Jamie Mason
24 Oct 14 12:05:27
RT @Brown_TheDeal: $GS and InnerCircle are advising @ATLHawks - YOU READ (half of) IT HERE FIRST: http://t.co/YNFcpy3SWc Thanks @BloombergN…
Baz Hiralal
24 Oct 14 12:03:00
RT @Brown_TheDeal: $GS and InnerCircle are advising @ATLHawks - YOU READ (half of) IT HERE FIRST: http://t.co/YNFcpy3SWc Thanks @BloombergN…
The Deal
24 Oct 14 12:02:37
RT @Brown_TheDeal: $GS and InnerCircle are advising @ATLHawks - YOU READ (half of) IT HERE FIRST: http://t.co/YNFcpy3SWc Thanks @BloombergN…
Carolyn B Miciano
24 Oct 14 12:02:16
Free course on portfolio hedging http://t.co/OroJJ5pvNb $GS $COST $FDX
Michael D. Brown
24 Oct 14 12:01:55
$GS and InnerCircle are advising @ATLHawks - YOU READ (half of) IT HERE FIRST: http://t.co/YNFcpy3SWc Thanks @BloombergNews and @nytimes
A.K
24 Oct 14 11:52:50
@canuck2usa $GS pattern is similiar with $GOOGL, resistant is 183.19. What makes you long put here? 0.618 bounce? Thanks
Dividend Master
24 Oct 14 11:47:22
DIMmies going for hail mary pass before elections . Brown & Warren demanding $GS investigations
Jonathan Yaw
24 Oct 14 11:41:19
RT @canuck2usa: $GS Oct5 weekly 182.5 puts Long @ 1.88/.85...
Stock Moo
24 Oct 14 11:36:47
$gs: Goldman Sachs targets alumni to boost women vice-presidents http://t.co/BAGMxQSoV3
Eternity101
24 Oct 14 11:15:50
like I said -- yellow bird $GS is foretelling mkts higher coming this week/s http://t.co/9S7vid9LB6
Max Eddy
24 Oct 14 11:14:41
RT @GoldmanSachs: $GS Asia President Ken Hitchner welcomes @YaoMing to #GSAM Symposium in HK discussing #leadership on & off the court http…
				
				
By  +Follow August 23, 2013 10:21AM
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