Inflation

[over9k]

China's been manoeuvring to get off oil & gas for quite some time now, pushing coal and electric cars hard. They obviously still need oil etc but coal's the play for them.

 

[Craton]

China's been manoeuvring to get off oil & gas for quite some time now, pushing coal and electric cars hard. They obviously still need oil etc but coal's the play for them.

Yes, that is true as the railway from Mongolia demonstrates, from this article.

For the next few years, coal will remain vital to China’s industrial strength and ability to power its cities. That’s where energy security comes in. China has invested heavily in freight railway capacity, in order to bring its own coal to its power and steel plants more cheaply.


It has also built rail connections to Tavan Tolgoi in neighbouring Mongolia, one of the world’s largest and cheapest sources of high-quality coking coal. With the new railway capacity, coking coal can now travel 1,200 kilometres to China’s steelmaking heartland in Hebei province, near Beijing.
For the next few years, coal will remain vital to China’s industrial strength and ability to power its cities. That’s where energy security comes in. China has invested heavily in freight railway capacity, in order to bring its own coal to its power and steel plants more cheaply.


It has also built rail connections to Tavan Tolgoi in neighbouring Mongolia, one of the world’s largest and cheapest sources of high-quality coking coal. With the new railway capacity, coking coal can now travel 1,200 kilometres to China’s steelmaking heartland in Hebei province, near Beijing.

Cheap, local access to that coking coal will impact us even more on top of the current import ban on Aussie coal.
Another factor is China's increased usage of scrap steel, both coal and iron ore exports from Australia will decline further in the next few years.

Of pertinent interest is carbon reduction not only in China but globally.

China’s ability to cut seaborne coal imports will grow further if its government increases its decarbonisation ambitions. These plans will be a key influence on the the remaining demand for seaborne coal.

Australia’s government and investors would be wise to consider these macro-level changes and plans as they look ahead, rather than focusing on short term gains from current market volatility.

That last statement if very salient.

 

[Smurf1976]

With all the Russian taps turned off, so to speak, one can even envisage fuel rationing as evident already in Europe.

Further, if China can't keep the manufacturing engines turning, I think we can kiss the recent good times (Covid not withstanding), goodbye.

Day to day is up and down as with anything but the Australian domestic energy market is certainly getting a lot tighter.

Natural gas was circa $ 6 to 8 per GJ a year ago and was ~$10 at the beginning of 2022. At present the price ranges from $15.49 in Victoria to $18.60 in Brisbane and the trend is clearly upwards despite the daily back and forth.

Black coal price is just ridiculous in terms of cost for anyone exposed to international pricing.

Operators of generation with constrained fuel supply are starting to ratchet prices up pretty dramatically so as to keep physical production volumes within sustainable limits. Price too low means they'll be heavily dispatched = not sustainable so as the price of coal etc rises they're also hiking price.

Year on year wholesale electricity spot prices for first quarter:

State = 2021 price per MWh| 2022 price per MWh

Queensland = $55.63 | $253.45
NSW = $40.79 | 116.63
SA = $49.49 | $109.31
Victoria = $44.79 | $102.29
Tasmania = $58.53 | $98.93
WA = $49.34 | 59.81
Average all states except NT = $42.20 | $133.28

So some pretty hefty increases there.

Tasmania tends to ignore the spot price when setting contract pricing, the real references used are being internationally competitive (industry) or at least nationally competitive (others), but for other states there's less of that focus, what happens with the spot market will tend to influence where contract and retail prices go albeit with some delay.

Just because your home or business electricity bills haven't gone up yet doesn't mean there isn't some serious pressure building on price. There most certainly is.

 

[over9k]

Tas is uniquely shielded here on account of running on all the hydro electric dams.

 

[Smurf1976]

Tas is uniquely shielded here on account of running on all the hydro electric dams.

Yep. The spot price in Tas exists as a function of being part of a wider market, the National Electricity Market, but with local costs mostly unchanged nothing prevents simply ignoring that when it comes to contracts and retail pricing.

WA is also somewhat shielded by having an effectively captive fuel supply which keeps local pricing down.

For the other states however, it's far more real and if it persists then it's inevitable it'll flow through to consumer pricing in due course. Might take a while due to various contracts and so on at fixed prices but in due course it will.

 

[over9k]

Here's a great way to protect yourself before these rises start to hit:

https://www.commbank.com.au/home-loans/commbank-green-loan.html

1% interest. Free money.

 

[3 hound]

Tas is uniquely shielded here on account of running on all the hydro electric dams.

Anyone remember the massive outrage and protest by Greenies opposing hydro in Tasmania?

Is hydro now considered green?

 

[Knobby22]

Anyone remember the massive outrage and protest by Greenies opposing hydro in Tasmania?

Is hydro now considered green?

No. Not if built in wilderness areas like the Franklin. That dam never got built.

 

[over9k]

Anyone remember the massive outrage and protest by Greenies opposing hydro in Tasmania?

Is hydro now considered green?

ask them i guess?

I was just speaking from a fuel burning/inflationary perspective.

 

[3 hound]

No. Not if built in wilderness areas like the Franklin. That dam never got built.

It was the first time I saw protestors, should have googled it before posting.

Fine balance between lowering emissions and not causing other environmental damage.

 

[moXJO]

USD, maybe gold.

Dude you want some silver?
I'll hook you up.

 

[againsthegrain]

Dude you want some silver?
I'll hook you up.

make sure you do the bite test, can't trust anybody if your a pirate... or is that gold.. arrrr

 

[divs4ever]

Anyone remember the massive outrage and protest by Greenies opposing hydro in Tasmania?

Is hydro now considered green?

remember YES

worked out the Greens were intellectual lightweights , a Polish ( Soviet educated ) mate has a much harsher opinion

am more in line with The Blue Movement

Birth of the blue movement​

Birth of the blue movement

Adam Werbach: To make environmentalism truly mainstream, we need to shift our focus away from political activism and toward everyday consumer choices

www.theguardian.com

( show business a potential profit and they will create a way )

 

[3 hound]

Dude you want some silver?
I'll hook you up.

Yes, I would...price??

 

[3 hound]

remember YES

worked out the Greens were intellectual lightweights , a Polish ( Soviet educated ) mate has a much harsher opinion

am more in line with The Blue Movement

Birth of the blue movement​

Birth of the blue movement

Adam Werbach: To make environmentalism truly mainstream, we need to shift our focus away from political activism and toward everyday consumer choices

www.theguardian.com

( show business a potential profit and they will create a way )

Not paying the guardian to read your link.

 

[divs4ever]

Not paying the guardian to read your link.

for a 14 year old article ??

glad to see the Guardian is slipping into obscurity ( i can't believe the Guardian has enough readers to fund a pay-wall system )

however search for The Blue Movement , they have some quirky concepts , but are probably better than the Greens or government-centric capitalism

they are big on using resources ( and waste ) efficiently , and upskilling the local population when they fund a project

 

[over9k]

Either it's hit by partisans/guerilla warfare from the ukrainians

Didn't take long:



Only preliminary reports at this stage

 

[over9k]

Trigger finger is now very itchy, there's been an outbreak reported in Beijing now too so markets have been absolutely slaughtered:



This is just premarket alone:



The perfect storm for temporary deflation of oil/energy demand.

 

[Smurf1976]

Anyone remember the massive outrage and protest by Greenies opposing hydro in Tasmania?

Is hydro now considered green?

I'll simply say that it's a very good illustration of something that saw major public debate at the time and very strong opinions expressed on both sides but with many failing to grasp many of the issus relating to the whole thing.

One of those key points of relevance that very few grasped was inflation.

Another was globalisation.

Another was bond yields.

Outside the pure environmental conservation issues as such, those three points were extremely relevant to other aspects of the proposal.

The concept of resource limits and the inevitability of extraction following a rise, peak and decline pattern actually was extremely well understood by the leaders of both sides, a point that can't be stressed strongly enough, but mostly missed in the actual debate.

So putting to the side all personal views on matters of politics and the environment, it's actually a pretty good illustration of several key economic concepts that underlaid both the original proposal, alternative proposals, the reasons for any proposal having arisen in the first place and the strategy used to oppose them. Economic concepts which have much wider application to resource development in general.

My personal view for the record is that I see both sides. I've had a decent look down there yes and agree there's an extremely strong case for conservation. On the other hand, I'm also well aware of the engineering facts of it all and of society's increasingly precarious predicament with energy. Or in other words, I see both sides and with that in mind, I actually have an alternative proposal that ticks most of both boxes at once with a bit of engineering trickery. Someday, depending on how it all pans out with the overall political and energy supply situation, I might make that public but not now.

If anyone wants to further discuss that sort of stuff let's take that to the relevant thread.

The future of energy generation and storage

It sounds as though there will be a major outage to strip the alternator @Smurf1976 https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02511624-2A1369338?access_token=83ff96335c2d45a094df02a206a39ff4...

www.aussiestockforums.com

Let's keep this thread on the topic of Inflation.

 

[over9k]

Day to day is up and down as with anything but the Australian domestic energy market is certainly getting a lot tighter.

Natural gas was circa $ 6 to 8 per GJ a year ago and was ~$10 at the beginning of 2022. At present the price ranges from $15.49 in Victoria to $18.60 in Brisbane and the trend is clearly upwards despite the daily back and forth.

Black coal price is just ridiculous in terms of cost for anyone exposed to international pricing.

Operators of generation with constrained fuel supply are starting to ratchet prices up pretty dramatically so as to keep physical production volumes within sustainable limits. Price too low means they'll be heavily dispatched = not sustainable so as the price of coal etc rises they're also hiking price.

Year on year wholesale electricity spot prices for first quarter:

State = 2021 price per MWh| 2022 price per MWh

Queensland = $55.63 | $253.45
NSW = $40.79 | 116.63
SA = $49.49 | $109.31
Victoria = $44.79 | $102.29
Tasmania = $58.53 | $98.93
WA = $49.34 | 59.81
Average all states except NT = $42.20 | $133.28

So some pretty hefty increases there.

Tasmania tends to ignore the spot price when setting contract pricing, the real references used are being internationally competitive (industry) or at least nationally competitive (others), but for other states there's less of that focus, what happens with the spot market will tend to influence where contract and retail prices go albeit with some delay.

Just because your home or business electricity bills haven't gone up yet doesn't mean there isn't some serious pressure building on price. There most certainly is.

Just had a musing about this on both a national and more global level:

If power prices spike, this means fewer people mining cryptocurrencies as the profitability just isn't there. This means more revenue/profit for those who remain doing so. It'll also mean a flood of GPU's hitting the market selling cheap as people just can't afford the power bill/it just isn't profitable in a lot of parts of the world any more.

All good news for someone that has a place to keep mining at lower power levels.

In short, the fewer geographies/places in which crypto mining is profitable on account of rising power costs, the more profitable those without the spiking power costs will be.


With tasmania's climate, this again places it in an enviable position from this perspective. Combine this with a 1% interest "green" loan from commbank for some solar panels and you might have yourself a very profitable little endeavour