Australia: Surging coal prices – ANZ

Research Team at ANZ, notes that the news that the sharp lift in coal spot prices has flowed through to a doubling of contract prices for Australian coking coal exports for the next quarter is clearly a boost for the economy.

Key Quotes

“While we continue to think that prices are unlikely to remain at these heady levels, the lift to national income in the near term is by no means insignificant – in the order of around 2% of nominal GDP. But while the recent surge in coal prices may not be completely sustained, the lift underlines our view that commodity prices have bottomed and the drag on national income that has been reflected in weaker, profits, government revenue, and wages has largely run its course. After falling for four years on a per capita basis, real national income is likely to rise solidly from hereon. The ‘income recession’ is well and truly over.”