FYI - The Atlantic has a good cover story by Charles Mann: What If We Never Run Out of Oil?
The last three weeks in export coal-related news:
CHINA
China's domestic coal production has posted a rare decline, raising new questions about the strength of the economy (Apr 29/Michael Lelyveld/RFA). Michael Lelyveld is always worth reading. He reports that electricity production growth numbers are surprisingly low and that coal imports are up over last year.
China Coal Falls to Lowest Price in Three Years; Stockpiles Drop (Apr 21/Jing Yang/Bloomberg). The stockpile drop is the result of planned maintenance on Qinhuangdao line, not market forces.
Faltering China demand hangs over Asian coal (Apr 17/Reuters/Fayen Wang). China's thermal coal demand has stalled and imports are set to fall this quarter, producers and traders say, removing the main prop of the Asian market and threatening to cut already weak benchmark Australian coal prices.
For China's coal miners the outlook is bad. Demand is flat, prices are dropping and imports are increasing. Their only course of action may be to cut production in order to put a floor under prices (Apr 26/Securities Daily/Tang Zhenwei). Shenhua, China's largest coal company, has directed its production units to cut costs 5% . At the same time,electricity producers are enthusiastically seeking imports. The current per tonne price difference between Australia and China is RMB 20-30 (USD $3-$5) and between Indonesia and China is RMB 40-50 RMB and (USD $6-$8).
On another front, China's domestic coal industry may launch a formal effort to convince the government to create new tariffs on imported coal (in Caijing, citing another report). They want a direct tariff, a VAT, and additional tariffs on low-calorie, high sulfur coal in order to raise domestic prices and limit competition from imports. Relevant bureaus are expected to be cautious introducing any such tariffs because of unexpected trouble they encountered upon inserting tariffs into the coking coal market a few years ago.
JAPAN
Japanese utilities and Australia coal sellers agreed on $95 per tonne price. The new price is down $20 or 17% from last year.
Reuters April 12th: "Australia's largest thermal coal exporter Xstrata Plc and Japan's Tohoku Electric Power Co have settled a benchmark annual supply contract 17 percent lower than last year, in a victory for cost-pressured Japanese utilities. . . .The price level, which was in line with most analyst expectations, will likely be followed by other Japanese utilities and will be used as a benchmark for Asia."
AUSTRALIA
Australia's environment minister said that he never saw his own agency's risk assessment saying that a proposed coal port posed "extreme" risks at the Great Barrier Reef.
The new Japanese benchmark price is less than the cost of production for 5 millon tonnes of Australian thermal coal and may lead to reductions in supply.
US
The Economist magazine had an overview of the Pac NW export coal dispute: Dirty War.