Big coal producers like BHP Billiton and Anglo American are enjoying a meteoric rally in the price of a major ingredient of steel. The boost to their earnings from spot prices reaching a three-year high is a welcome respite from the prolonged downturn in industrial commodities. It is also likely to burn out fairly swiftly. For big seaborne producers like BHP and Anglo, the increase in price creates a kind of windfall. The spot price for high-quality Australian coking coal has climbed 140 percent over the last six months to reach $206.40 a ton on Sept. 21 – albeit still more than $100 below its peak. BHP – the world’s largest shipper of the steel-making form of the fuel – may see $1.4 billion added to its full-year earnings before interest, tax, depreciation and amortisation (EBITDA) should prices hold their 90-day moving average of $110.55 a ton, based on its own published sensitivity assumptions. Anglo – which mines about half the volume of its larger rival – could get a near $560 ...
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