Greg Gibbs, Director at Amplifying Global FX Capital, suggests that the Australian coal producers, especially the steel-making (coking) variety, have benefited from production curbs in China but the outlook is unclear with reports that China is easing those curbs.
“Chinese industrial commodity prices have continued to firm despite the steady drumbeat of stories highlighting concerns over its financial sector stability, renewed efforts to control credit growth and the housing market (after both picked up this year and boosted demand for steel).
However, it is often better to follow the price signals, and consistently strong commodity markets in China are providing support for the AUD.
Coking coal prices have surged by around 180% this year. The first Japanese steelmaker contract agreement with an Australian coking coal exporter set the Q4 price at $200, up from $92.50 in Q3, at a high since 2012.
Iron ore prices have also firmed over the last month. They are down from their peak for the year in August, but are up 46% this year.”
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