For met coal, when you couple the export strength from Australia with the huge exports from the USA (see this post), along with a soggy ex-China crude steel picture, it is easy to understand why prices are so weak.
Perhaps the hope is that policy initiatives from Japan will help boost their steel sector both domestically and from a export competitiveness perspective. This would be good for met coal prices, as Japanese steel makers have a higher propensity to pay for quality coal. A weaker Yen is irrelevant as higher costs of imports is outweighed by stronger demand.
Australia's growth in thermal coal exports should continue with ramp up at several operations still likely given the sunk capex. It also may be the case that other high cost operations will aim to produce more rather than less, as improving productivity is one way to get cost per unit down. For example, the relatively high cost Warkworth operation in the Hunter Valley has been in the news lately debating approvals to expand this mine as not being able to do so would render it uneconomic.
From an Australian GDP perspective, the strength of exports should help underpin an OK GDP number in 1Q13, as it did in 4Q12. But stronger exports in a materially weaker price environment than expected is not good news from a macroeconomic perspective, as it puts huge pressure on current operations and future expansions.
