Fixed export contracts to dive in March negotiations

AUSTRALIA’S coal industry will face apprehension over the next three months as bulk commodity export contracts come up for renewal and renegotiation from late March next year, amid slowing demand and the ongoing global financial crisis.
Fixed export contracts to dive in March negotiations Fixed export contracts to dive in March negotiations Fixed export contracts to dive in March negotiations Fixed export contracts to dive in March negotiations Fixed export contracts to dive in March negotiations

Dalrymple Bay Coal Terminal. Courtesy Prime Infrastructure.

Blair Price

On the day the Australian Bureau of Agricultural and Resource Economics released its December quarter report, ABARE senior commodity analyst Alan Copeland reaffirmed a widely held view that thermal and metallurgical coal as well as iron ore contract prices are expected to head south, especially given the high prices achieved earlier in the year.

“For the remainder of this financial year exports will continue to be underpinned by fixed contract prices, certainly up until March,” he told International Longwall News.

“A large proportion of bulk commodity prices will be locked in until the end of March next year, then those contracts are renegotiated and there are a number of factors that indicate those contract prices might come down for April.

“The falling value of the Australian dollar will offset the potential fall in contract prices, but it all depends on how things turn around from the global economic growth perspective.”

Copeland said prices for coal remained historically high compared to a few years ago and prices for metallurgical coal exports, around $US300 a tonne, achieved during the recent peaks were unprecedented.

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