This should help the NAV. Coking coal is on a tear and Sprott's 19% ownership in Corsa Coal a supplier of Coking Coal was up 68% today.
Coking coal over $US150 a tonne
Coking coal prices have continued their astonishing push higher, rising to more than $US150 a tonne as China cuts back on production and steel demand remains strong.
As of yesterday, spot prices for Australia’s second biggest export, after iron ore, were up 51 per cent since the start of August, and the price has not fallen during any session since August 2.
On Monday night, premium coking coal prices rose $US11, or 8 per cent, to a 3½-year high of $US152.20, continuing a run up from below $US80 in March. The gains have come after China cut annual statutory working days for coalmines from 330 to 276 to ease overcapacity, while scheduled maintenance hit Australian production and Chinese steel demand continues to grow.
BHP Billiton, the world’s biggest exporter of coking coal thanks to its Queensland mines, does not expect the price gains to last.
“The price we’re really surprised at, versus six months ago, is actually metallurgical (coking) coal,” BHP’s Singapore-based markets vice president Huw McKay told reporters.
“We understand that what’s going on in met coal, very clearly, is a supply side shock.”
BHP’s most senior coal executive, the BHP Mitsubishi Alliance asset president Rag Ugg, told The Australian last week that the miner expected prices to fall before the end of the year as new supply came on.
UBS this week raised its coking coal price forecast for this year by 10 per cent to $US96 a tonne and for next year by 13 per cent to $US101. Smaller miners have been lifted by the gains. Stanmore Coal, which bought the mothballed Isaac Plains coking coal mine for $1 last year, was up 7.5c, or 19 per cent, to 47.5c yesterday, almost doubling its share price since the start of August.
Mongolia-focused junior Aspire Mining was up 1.2c, or 67 per cent, to 3c, after a well-timed announcement that it had received an expression of interest from the China Development Bank to fund its Erdenet to Ovoot rail project in Mongolia. The project is part of a new rail corridor connecting China and Russia through Mongolia as part of China’s One Belt, One Road policy.
Most analyst forecasts for coking coal remain at around $US80 per tonne for this year, illustrating the surprising extent of the gains.
This year’s budget is factoring in prices of $US91 a tonne, which most pundits saw as overly optimistic when it was released in May, while Queensland has budgeted for $US88 a tonne.