While mining company earnings will benefit from gradually higher mineral prices in the coming years, the broad-based surge in mining equities over the past 12 months has already priced in most of the good news for the sector, in our view.
Should the ban be implemented, it would be a material net positive for seaborne coking coal prices. China imported 22.5mn tonnes of coal from North Korea in 2016, representing 12.3% of the country's total imports. The need to source this coal from elsewhere will boost demand for imports from other major coking coal suppliers, including Australia, Canada, Russia and Mongolia.
The Chinese government's aim to balance environmental protection with cheap and stable coal supply to households and steel mills will generate significant volatility in the global coal market in 2017. The country will shift to cleaner sources of coal through heightened consolidation of 'dirty' mines while increasing production from 'cleaner' mines in order to remain on track to attaining self-s...
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Thanks, BMI Research