Unlike in WA where iron ore is the major commodity, in Queensland it’s coal that’s the big deal, and we should be thankful the Chinese ban on Aussie thermal coal doesn’t appear to have been that effective, as evidenced by Australian thermal coal prices increasing over the last few weeks (see chart below, noting 1st position refers to futures contracts for December 2020 and 12th position refers to contracts for November 2021). This is great news, as I’ve been very concerned about the implications for Queensland’s economy of Chinese trade restrictions.

The Financial Times, in an article published yesterday, Coal prices rally on strong Asian demand and tight global supplies, explains:

Despite the lack of Chinese buying, Australian thermal coal prices have also surged in recent weeks.

Higher China demand has pushed up the price of Indonesian, Russian and South African coal, allowing Australian producers to push material into less traditional markets of Bangladesh, Turkey and India.

While the increase in the thermal coal price is welcome, I think it needs to go higher still (to say US$100/tonne) to guarantee the ongoing viability of several thermal coal mining operations across Queensland.

I should also note we’re yet to see a pick up in the more important (for Queensland) coking coal price, although it is expected to recover over the next twelve months (see chart below).

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