Thursday, February 16, 2012

Opportunity Knocks

The new kid on the block, particularly for China, is Mongolia, providing a rapidly developing alternative for Chinese buyers to Australian imports. Mongolian coking coal exports to China rose 37 percent year-on-year to 17.5 million tons in Jan-Nov 2011. With Mongolia’s expansions continuing, HSBC expects Mongolia’s coking coal exports to rise from 21 million tons in 2011 to 28 million tons in 2012.

Mongolian coal has both a grade and price advantage over domestic Chinese coking coal and a price advantage over Australian imports, so the trend of rising Mongolian imports to the detriment of Australia and the US is likely to continue in 2012. If Chinese steel production slows, or even contracts in 2012, this trend will simply be exacerbated.

Steelmakers Welcome Falling Coking Coal Price Trend via Mongoliana