Sally Thorpe

Non-competitive market behaviour in the international coking coal market

In this paper, a primal dual programming model of international coking coal trade is constructed to test for non-competitive market behaviour. World trade in 1996 is simulated under perfect competition and various non-competitive market structures. Statistical tests are used to compare simulated trade flows with actual data. Assuming Cournot-Nash behaviour, an all consumer oligopsony market structure is preferred to alternative models. Under an all consumer oligopsony world coking coal prices and trade are lower than under perfect competition. Under an oligopsonistic structure welfare gains from productivity increases in Australian coal mines might largely accrue to coal buyers.

Australia–Japan coking coal trade: A hedonic analysis under benchmark and fair treatment pricing

Abstract Given Japans dominant position in the Asia–Pacific regional coal market and the continuing relatively low profitability of Australias coal industry, the influence of the Japanese steel mills on coal pricing arrangements between Australia and Japan remains an issue in Australia. In Japanese fiscal year (JFY) 1996, the Japanese steel mills replaced benchmark pricing with the “fair treatment” pricing system whereby coal contract information is kept confidential. In this paper, Quandts switching regime model is used to test for structural change in hedonic pricing relationships in the important Australia–Japan coking coal trade between JFY 1992 and 1997. There is statistical evidence of significant structural change in JFY 1996 for hard coking coal and in JFY 1995 for semisoft coking coal (when soft coking coal was merged with the semisoft category). The goodness of fit of the regressions is lower in each recent period. It is concluded that price discovery in the annual coal negotiations, particularly for hard coking coal, is relatively more difficult under fair treatment pricing.

Pricing of Australia's coking coal exports: A regional hedonic analysis

Abstract Black coal is Australias most important export commodity, but the profitability of the domestic coal industry has been low relative to the mining sector average. As a consequence, a key policy issue in Australia has been the extent to which Japans coal pricing and investment policies have influenced coal market outcomes. In this paper, a regional hedonic pricing model of Australias coking coal exports is estimated for the period JFY1989 to 1996. Non-Japan regional intercept dummy variables were found to be significantly different from zero, although these varied across coal categories and years. However, the empirical evidence indicates that Japan does not pay significantly lower prices relative to other major export markets for coking coal of a given quality.