Last week saw a surge in coal prices due to global demand and supply factors (some of which are likely only temporary), as discussed in a nice piece by Bloomberg journalists reprinted by the Brisbane Times It’s not over for coal as global prices surge on hot demand. Queensland Senator Matt Canavan has told Alan Jones on Sky Australia that Aussie coal is ‘high quality, in demand’. If it lasts, the coal price surge would be really good news for Queensland’s economy and state budget, although the highly uncertain long-term outlook for coal remains, given growing pressures globally to decarbonise.
Here’s a chart showing the price surge for thermal coal (see chart below, noting 1st position refers to the futures price for delivery in one month’s time and 12th position the futures price for delivery in 12-months’ time).
While the Bloomberg article discussed the thermal coal price, coking coal, which accounts for the majority of Queensland’s coal exports, also saw a price surge, at least for the short-term (see chart below).
I doubt last week’s price surges will have any impact on Queensland Treasury’s budget forecasts as they may well be temporary. At the moment, I don’t have a strong sense of how much Treasury will revise its coal royalty revenue forecasts in the upcoming state budget (to be handed down Tuesday next week, 15 June), but I will endeavour to address this question in a future QEW post.
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