Peter Gallagher

The answer to the first ques­tion may sur­prise you. Click the image.

The answer to the sec­ond is one of those ‘gotchas’ that char­ac­ter­ize bulk com­mod­ity mar­kets. Big pro­duc­ers with a vari­able local demand can play havoc (fairly or unfairly) with the world mar­ket price. That’s true in most agri­cul­tural com­modi­ties, too. Of course the impact on the ‘spot’ mar­ket price will not trans­late directly to the con­tract price for for­ward supply.

And the headache? It has noth­ing to do with ‘global warm­ing’. Eco­nomic growth in our main export mar­ket for both cok­ing and ther­mal coal has slumped from noth­ing to less-than-nothing. Mean­while, the down­turn in domes­tic demand in the world’s biggest pro­ducer of both kinds of coal will see mar­ket sup­ply of coal rise and the prices plummet.

If you’re hop­ing for rapid devel­op­ment of ‘car­bon seques­tra­tion’ of car­bon emis­sions from coal, you’re bound to be disappointed.

The infor­ma­tion about coal exports and the images come from an arti­cle by Dan Andrews in the Jan­u­ary 2009 Reserve Bank Bul­letin.