Commodity prices make late revival
Prices of iron ore, metallurgical and thermal coal, Australia’s key commodity exports, hit decade lows in 2016. This sapped profits and forced some high cost miners out of the market. But supply disruptions, in particular Chinese regulations, caused global coal prices to surge at the end of the year, with metallurgical and thermal coal reaching highs last seen during the mining boom. In addition to regulations in China, Australian supply disruptions (train derailment in Qld and outages at a couple of met coal mines across NSW and Qld) were also noteworthy in the recent surge in coal prices. Iron ore prices have also been on a tear reaching the highest level in two years, spurred by robust Chinese steel production. Higher commodity prices have been a boon for mining profits, but will need to be sustained if they are to significantly lift incomes and profits across the broader economy.