2H13 should be much more subdued for Australian coal exports as there little additional capacity ready to come online that wasn't already there this time last year. Coking coal prices continue their alarming slide, although the big drop in the A$ is helping to mitigate some of the cash flow pain. Either way, all the pressure will be on reducing costs and eliminating unnecessary capex.
Unlike coal, the rest of the seaborne iron ore equation has been weak. April data for Brazil show a slide in shipments, while Indian exports are still very weak. Strong Australian growth is ok while the rest of the equation is so bad, but given the multi-year ramp up, the risk is that exports from elsewhere bounce back.
Iron ore prices have come off, although analysts now seem divided on whether they will continue to fall or pick up on restocking interest. I dont think its worth going long, as while stock levels are low in terms of current consumption, steel production rates are way to high. So there might be a bit of support from an end to de-stocking, but not really upside from mills restocking.
This dynamic should mean iron ore will avoid the route that we saw into Q3 last year. But nerves will be tested given the Chinese macro picture continues to disappoint, steel inventories remain very high and the risks to construction mount given the unwanted boom in property market activity and credit in China.
