Thank you, sir! Tonight, it was the same situation for Stanmore and Coronado ('half' American, of course). However, they said "no problems with potential tariffs" on the last call. So why are the Aussies suffering so much? I mean, in terms of market psychology regarding Australian metallurgical coal stocks?
Less buying stuff from china = less production energy and resources needed to keep all those factories humming.
Having said that, i would expect that met coal and coal would suffer but still significantly less than everyone else. After all, those high speed trains, ev’s keep running and housing still need to be heated.
So market has it backwards. As usual. Short ratio’s are through the roof. So prices are temporarily depressed
I keep sitting on my yal whitf . May buy some more of arch btu cnr metc etc. After all, that production is shifting from china to the US.
It is a rat’s nest of secondary and tertiary effects Ragnar…I think US and EU steel both go up, and China probably does a little too. But to your point if RoW can’t absorb China steel tonnes due to trade cases then maybe not.
Ramaco's management said in the last call that many exporters would struggle to renew their Asian contracts if prices remained at this level in April. And they mentioned this before the "Capex liberation day".
Could some undercapitalized small Australian players be pushed out of the market, or was Ramaco’s management specifically referring to U.S. companies?
As we said in the podcast, we just don’t have enough information yet to even try to go down that rabbit hole and get an accurate answer.
BUT - longwall shields are made in either EU or China so HCC def more exposed right now. Gotta have some patience (and hedges!) while this initial volley plays out.
Am I the only person who is of the opinion that the market has it completely backwards?
For all domestic miners, those tariffs should not affect their domestic consumption negatively.
Met miners actually should benefit since less foreign competition ; demand will increase due to repatriation of manufacturing back to the US.
The fear of tariffs on what they export, did everyone miss the detail that they are to balance trade?
China can reduce the tariffs if they import more stuff from the US. They are short in coal and if they import MORE coal from the US , trade imbalance will be less and tariffs can come down. If they want to return the favor to Trump by imposing their tariffs as well it will only result in the US tariffs to rise and the stuff they want to sell will have more competition from US manufactured stuff.
And then there is the DOE . I recommend listening to the senate confirmation hearing of yesterday of the 2nd appointee there. Even the obstructionist democrats seemed to want more energy production and more infrastructure for transmission. And last time I checked that needs a lot of steel. And they need more reliable energy . Those new gas and nuke power plants will take a while to build (with lots of steel) and they will need our coal plants to stay open or reopen. Again, listen to the hearing and make up your mind yourself.
Finally someone who thinks further from the next quarter 👌
Of course, if you duplicate the supply chains, in less efficient way, and on top of that in a hurry, a lot more of steel and many other imputs will be globally in total.
I am puzzled because I had thought them to be smarter. With this they are shooting in their own feet:
Response to that will be another tariff and may be another counter and so on.
It will reduce the direct trade between the US and China to 0 and move all trade to indirect trade through proxy countries.
However a 10% tariff was imposed on all countries by the US so anything exported to the US through these proxies will still face a 10% tariff. Export from the US to China through proxies or replacement however will not.
There is some extra middleman or better called middlecountry cost for US producers with stuff bought by China but that is all.
Met coal demand from China will only reduce if China needs less because they are in trouble. That is possibility. But very well that decline can be offset to increase in demand in the US because those factories and production are moving back to the US.
And all those production facilities will need more energy that will be produced by no longer shuttered coal plants. Yes, coal demand in China may go down but we just don’t have to ship it to China but use it here
I thinly they retaliated because they know that their exports will be curbed by the US in any scenario - as the main reason is the wish to stop them in the great game of the Global Geopolitics, not to bring all production of everything back to the US.
Thank you, sir! Tonight, it was the same situation for Stanmore and Coronado ('half' American, of course). However, they said "no problems with potential tariffs" on the last call. So why are the Aussies suffering so much? I mean, in terms of market psychology regarding Australian metallurgical coal stocks?
Less buying stuff from china = less production energy and resources needed to keep all those factories humming.
Having said that, i would expect that met coal and coal would suffer but still significantly less than everyone else. After all, those high speed trains, ev’s keep running and housing still need to be heated.
So market has it backwards. As usual. Short ratio’s are through the roof. So prices are temporarily depressed
I keep sitting on my yal whitf . May buy some more of arch btu cnr metc etc. After all, that production is shifting from china to the US.
Eventually the market will figure it out.
It is a rat’s nest of secondary and tertiary effects Ragnar…I think US and EU steel both go up, and China probably does a little too. But to your point if RoW can’t absorb China steel tonnes due to trade cases then maybe not.
Assume that is just because the spot market still stinks - no demand and plenty of supply, which is just typical shoulder season stuff.
Ramaco's management said in the last call that many exporters would struggle to renew their Asian contracts if prices remained at this level in April. And they mentioned this before the "Capex liberation day".
Could some undercapitalized small Australian players be pushed out of the market, or was Ramaco’s management specifically referring to U.S. companies?
That was about US companies I believe
My stingy YAL.ASX buy order finally went off - been sitting there for months. Give my thanks to the D.
Not sure coal markets will be great next couple months but whatever YAL does gonna outperform the broad US market as long as this keeps up.
Thanks, I miss a bit more specificity on steel impact for AMR types mines vs WARRIOR types mines.
Could you please make your best guess how these two different models of operations are going to be affected ($/metric ton) and explain why?
My feeling is : warrior types mines will be more affected
As we said in the podcast, we just don’t have enough information yet to even try to go down that rabbit hole and get an accurate answer.
BUT - longwall shields are made in either EU or China so HCC def more exposed right now. Gotta have some patience (and hedges!) while this initial volley plays out.
Am I the only person who is of the opinion that the market has it completely backwards?
For all domestic miners, those tariffs should not affect their domestic consumption negatively.
Met miners actually should benefit since less foreign competition ; demand will increase due to repatriation of manufacturing back to the US.
The fear of tariffs on what they export, did everyone miss the detail that they are to balance trade?
China can reduce the tariffs if they import more stuff from the US. They are short in coal and if they import MORE coal from the US , trade imbalance will be less and tariffs can come down. If they want to return the favor to Trump by imposing their tariffs as well it will only result in the US tariffs to rise and the stuff they want to sell will have more competition from US manufactured stuff.
And then there is the DOE . I recommend listening to the senate confirmation hearing of yesterday of the 2nd appointee there. Even the obstructionist democrats seemed to want more energy production and more infrastructure for transmission. And last time I checked that needs a lot of steel. And they need more reliable energy . Those new gas and nuke power plants will take a while to build (with lots of steel) and they will need our coal plants to stay open or reopen. Again, listen to the hearing and make up your mind yourself.
Finally someone who thinks further from the next quarter 👌
Of course, if you duplicate the supply chains, in less efficient way, and on top of that in a hurry, a lot more of steel and many other imputs will be globally in total.
Also infrastructure is built with rebar which comes from EAFs not blast furnaces…no effect on met coal consumption.
Domestic tons will be ok but a) margins won’t change if costs go up by an equal amount, and b) it’s just a MUCH smaller market.
US domestic met consumption is only like 18-20 Mst. Exports are like 60 Mst.
There are only a few mines with 100% domestic sales.
So China went the counter tariff way.
I am puzzled because I had thought them to be smarter. With this they are shooting in their own feet:
Response to that will be another tariff and may be another counter and so on.
It will reduce the direct trade between the US and China to 0 and move all trade to indirect trade through proxy countries.
However a 10% tariff was imposed on all countries by the US so anything exported to the US through these proxies will still face a 10% tariff. Export from the US to China through proxies or replacement however will not.
There is some extra middleman or better called middlecountry cost for US producers with stuff bought by China but that is all.
Met coal demand from China will only reduce if China needs less because they are in trouble. That is possibility. But very well that decline can be offset to increase in demand in the US because those factories and production are moving back to the US.
And all those production facilities will need more energy that will be produced by no longer shuttered coal plants. Yes, coal demand in China may go down but we just don’t have to ship it to China but use it here
So the market has it backwards IMHO….
I thinly they retaliated because they know that their exports will be curbed by the US in any scenario - as the main reason is the wish to stop them in the great game of the Global Geopolitics, not to bring all production of everything back to the US.
Thanks guys
We are sailing in uncharted waters…there’s no established playbook.
Yes there is
Boats that have sufficient cash at hand will stay afloat.
Weaker hands may go under and those that stayed afloat will have less competition.
So who is the weakest and who the strongest (in capital burn rate due to base cost and overhead, —not production— and not total amount in the bank)?
In order to calculate that with any confidence we need clarity on tariffs and price, and we have neither
Haha our pleasure…no idea even if we’re correct obvs, but it’s as good a guess as any right now.