Energy Transition28 Sep 2021 12:37
Guys..I love your stuff here but whilst I am no expert their are fundamental changes taking shape in the post COVID world…The basic problem is the West is decarbonising at a transitional stage. ..whereas the more under developed Eastern economics like India, ****stan, , Sri Lanka, etc are still where we were years ago. COVID stopped everything and now economies are playing catch up but being green is not enough..There is plenty of oil, coal and gas buts it’s in the wrong places as world demand outstrips supply. Normally, under such conditions, users can or could switch from say coal to gas or to oil but now everything is up.This is a dangerous situation as it will cause big jumps in prices and eventually demand will have to fall or tail off or we will get hyperinflation.
My current view is we will have rapidly rising prices this year but by this time next year , we could have stag inflation or a deflationary bust.,.This consequences of deflation are falling demand ,falling supply and falling GDP….Central Banks need to be ready for this as it’s dangerous…but if you own Gold or a product in demand like thermal coal to produce steam to power turbines ..it’s potentially great because you still need electricity and if you mainly produce electricity with your coal powered power station, you still have demand.
Personally, I think the price of thermal coal next year must fall, or fall just enough to still make it more attractive than oil or gas …which way it goes no one knows…As the saying goes, ride your winners but whilst we all want the dividend , at some point next year, TGA must be ready for falling thermal coal prices as nothing keeps on rising forever. Wishing us all continued success.