Pete Wargent blogspot

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Friday, 29 June 2018

Coal fires up

King coal

Coal prices remain, erm, on fire.

ABC News reported on the trend here

This is terrific news for the Newcastle and Hunter Valley region, which had taken a temporary hit as the coal price collapsed a few years ago.

Although export volumes remain off their peaks, the coking coal price is up at around US$200/tonne - a far cry indeed from the nadir - while thermal coal is also cruising along at about US$120/tonne.

Whitehaven Coal (ASX: WHC) was trading at $5.80 today, a remarkable rebound from just 36 cents in early 2016, when it seemed for a time as though the company was flirting with insolvency.

Record mining profits, record employment, now record job vacancies thanks to Victorian infrastructure projects - that's a pretty handy combination which if sustained could push Australia back towards a Budget in balance in quick time.

Meanwhile in the housing market what's old is new again, with some resources regions moving towards rental shortages, especially in coal-fired locations.

Notably in Muswellbrook:


Source: SQM Research

Further north in the coal mining town of Moranbah, where real estate prices crashed by up to 80 per cent from the peak during the bust, it appears to be a similar story. 


Source: SQM Research

In Gladstone, meanwhile, where LNG investment is making a bit of a rebound, vacancy rates have declined from a horrifying 16 per cent in 2016 to 3.4 per cent in May 2018, and continue to trend down. 

I doubt so many housing market investors will pile in this time around - with investor credit harder to access even if they wanted to.