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Coal Production Increases On Weaker Australian Dollar

By  +Follow August 23, 2013 10:21AM
Tickers Mentioned:

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.

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Results for gs
Joe Hentges
27 Apr 15 06:08:44
ICYMI Weekend Market Update http://t.co/EwGER7WYK2 $GS $BAC $JPM $V $DJIA $SPX
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Share an idea on $MOBL #MobileIron with #BlackBerry bashers $GS $MS #Faucette #Simona http://t.co/k2j206ovTw
John L. Bair
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Hey #Faucette #Simona $GS $MS #ICYMI EQUITY ALERT: The Rosen Law Firm Announces Securities Claims Against #MobileIron http://t.co/7SP72yvoVB
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$CJES WOW! $GS UPGRADES oil service so they're going bullish on #oil too?? @SullyCNBC @EnergyPhilFlynn $USO $XOP https://t.co/lPJ29fCjHL
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Dividend Investing http://t.co/8TGkCBIR7O #DividendInvesting $AXP $GS $MCO $WMT $USB $WFC $PG $IBM $KO $XOM #BuyLowSellHigh #BigBusiness
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Markets expecting one more flash crash http://t.co/lLpYuiiyjg $GS $COST $FDX
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Dividend Investing http://t.co/8TGkCBIR7O #DividendInvesting #StockMarket $AXP $GS $MCO $WMT $USB $WFC $PG $IBM $KO $XOM #Investment #money
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Weekly Dow #Stocks Trend $MSFT $IBM $MCD $DIS $VZ $AAPL $CAT $JNJ $PFE $V $CSCO $NKE $UNH $CVX $GS $DD $JPM $XOM @ http://t.co/TvzJfd0RGT
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RT @valuewalk: 2010 Flash Crash Arrest: Follow The $$? via @EconMatters $XLF $IYF @TheJusticeDept @CFTC $GS $$ $JPM @nanexllc http://t.co/8…
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26 Apr 15 20:01:33
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So proud of my team of graduates! #10KSBGrad $GS #10kSB http://t.co/Vqd1cg8BUG
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Thanks Amy at @mmitextiles for the wonderful gift! #10KSBGrad $GS #10kSB http://t.co/sEIOu5WNBg
Stephen s
26 Apr 15 19:16:59
RT @kyleflorida66: $UBQU only #MJSTOCK with Real Revenues! Forget $NGCG $THCZ $MYEC $MCIG $OSLH $CNCT $HEMP $FB $AAPL $TWTR $GOOG $HALB $T …
Kyle Baker
26 Apr 15 19:04:55
26 Apr 15 18:53:11
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Ophir Gottlieb
26 Apr 15 18:36:11
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Douglas Dowell, JD
26 Apr 15 18:11:18
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26 Apr 15 18:06:55
#FlashCrash Arrest Raises Serious Questions For #DOJ - $GS $DB $DBK $UBS $MS $HSBC $HSBA by @EconMatters http://t.co/VSB3iSoFiS
Ashish Chowdary
26 Apr 15 18:06:29
RT @GoldmanSachs: Who will buy the #AppleWatch? $GS analysts break it down: http://t.co/pSkuax4QFj cc @Bloomberg http://t.co/Ql9mi7vLOL
26 Apr 15 18:05:30
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26 Apr 15 18:05:03
$GS: 2010 Flash Crash Arrest Motivated By Greed: http://t.co/YCDJGWelMJ
26 Apr 15 17:55:00
RT @GoldmanSachs: $GS Japan vice chair Kathy Matsui talks to @WSJAsia on how economic survival drives #Womenomics progess in #Japan: http:/…
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26 Apr 15 17:54:19
RT @GoldmanSachs: PODCAST: $GS' Kevin Daly on impact of falling #oil price on #UK economy, potential interest rate timing from #ECB: https:…
26 Apr 15 17:54:00
RT @GoldmanSachs: Good luck to all those running in the #LondonMarathon this weekend! We'll be cheering on all $GS runners taking part http…
Capital Market Labs
26 Apr 15 17:29:31
Largest Diversified Financials Earnings 1: $BRK.A 2: $GS 3: $AXP Chart: http://t.co/HRAcTH384D http://t.co/9UVn7OllKL
Agriconsultant Team
26 Apr 15 17:24:21
The $GS must have for the $ETSY banker in your life ....LOL These are awesome. @zerohedge https://t.co/UejSz4HjlE
26 Apr 15 17:24:21
The $GS must have for the $ETSY banker in your life ....LOL These are awesome. @zerohedge https://t.co/7H5f3AGCMi
Venky Srinivasan
26 Apr 15 17:20:53
$GS Tight consolidation after ER, momentum indicators working off some overbought conditions. IHS still valid. http://t.co/esHNkuyfhG
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26 Apr 15 15:34:20
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26 Apr 15 15:30:37
$RDSH Financials Updated Sunday, April 26, 2015 5:59:24 PM $ABX $GS $ENZN $JNPR http://t.co/K4gh3rahLT
By  +Follow August 23, 2013 10:21AM



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