If there is one thing I learned from working in the mining industry, it is that forecasting commodity prices is a fool's errand.
Since it accounts for almost one third of the Reserve Bank's commodity price index, iron ore is attracting most of the headlines, but as we will consider below, it could be the coal mining regions which face the brunt of the pain.
Part 1 - Price
As I looked at here the respective prices of coking coal and thermal coal have genuinely crashed, and with Australian coal mines at the sharp end of the cost curve we are going to see an ugly shakeout of the high-cost producers and elevated levels of unemployment in coal mining regions.
Coal mining regions are already suffering badly, new coal projects are unlikely to get off he ground in the present environment, and unemployment in coal mining regions has already been rising worryingly.
How far this has to run is anybody's guess - it's nigh on impossible enough to forecast in markets where the LME provides great transparency on warehouse stocks let alone where assumptions are reliant on rubbery data out of China.
We're still in the midst of a spectacular downtrend at present which will hurt Australian income, is pushing the Australian dollar dramatically lower and is now likely to force marginal producers to the wall and out of the game, until upwards pressure returns on prices, however long that may take (click chart).
The two charts below show just how many Australian coal producers potentially face making losses unless they can somehow slash costs or commodity prices rebound quickly.