Chinese Slowdown Fears Rock Coal Price

From Financial Review

Turmoil in emerging markets and nervousness around the Chinese economy have rocked global bulk commodities, but economists are confident that Beijing’s reform agenda will contribute to stabilising prices.

Iron ore and coal were the hardest hit. Thermal coal prices out of Newcastle plunged 8.4 per cent in January, while premium hard coaking coal from Queensland dropped 5 per cent, according to data from Platts. Iron ore shed 8.4 per cent.

This compared with the IMF primary commodity price index falling 1.9 per cent. Copper and aluminium eased modestly, while lead, nickel and zinc all rose, according to data compiled by HSBC.

A lower Australian dollar limited losses for Australian exporters, with local price index falling 1.1 per cent in AUD terms, HSBC chief economist Paul Bloxham said.

Although part of the weakening coal prices has been attributed to seasonally weak steel production and the Chinese New Year break, Mr Bloxham said concerns about a potential slowdown in emerging markets had also contributed to the declines.

Thermal coal, the cheapest fuel to generate electricity, is closely linked to the industrialisation on emerging economies, such as India and Turkey, which have cut orders in US-dollar traded coal imports as their currencies weaken.

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