Sunday, January 18, 2009
Bulked up by iron ore, coal
Sunday, 18 January 2009
Amid concerns the slump in global raw materials demand will pull the nation into recession, a report revealed exports of so-called bulk commodities grew five times in the six years to 2008, thanks to surging prices driven by China. Coking coal, used in steel production, thermal coal, used in electricity generation, and iron ore are known as bulk commodities because they are traded under contracts between suppliers and customers rather than on an exchange, such as base metals.
"Australia is the largest exporter of coking coal, and the second-largest exporter of thermal coal behind Indonesia," the RBA report said. "Europe and Japan are the world's largest importers of coal, together accounting for one-half of world coking coal and thermal coal exports in 2007.
"Turning to iron ore, Brazil and Australia are the world's largest exporters, while China accounts for almost one-half of global imports, with Europe, Japan and Korea accounting for much of the rest."
In the report, the RBA also noted the widely expected cuts to coking coal and iron ore prices in this year's contract negotiations between big miners including BHP Billiton and Rio Tinto and Asian steel mills.
"Market analysts have significantly revised down their expectations for bulk commodity prices over recent months, with the next set of contracts expected to be settled at significant discounts to the 2008-09 contract prices," it said.
"This reflects the slowing in global industrial activity and a partial easing of constraints on the supply side.
"Developments on the demand side -- especially China which accounts for close to half of global demand -- will continue to have a significant influence on prices for coal and iron ore."
The RBA report was released as Rio reported big cuts in quarterly production of iron ore following a 10 per cent reduction in annual output in Western Australia's Pilbara late last year.
Source: Herald and Weekly Times
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