Estimates for the total damage bill facing the country recently reached up to $US309 billion ($A299 billion), but Japan was hit with a 6.5 Richter-scale quake this week and authorities continue to struggle to prevent a full meltdown at the Fukushima nuclear power plant.
Ultimately the impacts to Australia’s key trading partner provided some immediate hits to key mining commodities, while reconstruction efforts are expected to lift demand in the months ahead.
Detailed in its research quarterly this week, ANZ forecast nominal coking coal prices to stay elevated at around $250 a tonne until the end of 2013, before falling by about 12% from that level by the end of 2015.
“For nominal iron ore prices, ANZ is now forecasting prices to stay elevated at around $170 a tonne until mid-2013, before falling by around 30% by end-2015,” the bank said.
Discussing some of the current impacts, ANZ said about 1.7 million tonnes of annual refined copper output has been temporarily shut down in Japan.
“Iron ore and coal markets could soften. The temporary closure of thermal power and steel capacity in Japan will dampen imports for the largest seaborne coal consumer in the global market.
“However, thermal coal could surprise on the upside if the negative sentiment around nuclear power intensifies and triggers stronger growth expectations for thermal power – something we are already seeing.
“Reports that a lot of Japanese coal port stocks have been washed away will also trigger a strong restocking phase once port facilities are brought back on-line.”
The iron ore market “looks too highly priced” to the analysts at the moment, who fear the risk of destocking at China’s ports due to rising lending costs in that country.
“Restricted port capacity in Japan will ease tight seaborne supply conditions as shipments are diverted. The return of higher Indian iron ore exports in April after eight months of partly banned output will also add to supply.
“However, the downside won’t be too great. Stronger seasonal steel demand in China and the potential for a jump in Japanese steel imports (as we saw soon after the
1995 Kobe earthquake) should support a rise in iron ore demand.”
With the Japanese financial year kicking off in April, Australian thermal coal exporters are starting to negotiate annual contracts for the commodity.
Indexed spot prices for Newcastle-exported thermal coal are below $124/t free-on-board, down from almost $130/t in early March.
The devastating wet season in Queensland has already created a surge in hard coking coal prices, with June quarter contracts struck in a range of $325-330/t according to various reports.
This is up from the March quarter premium benchmark of $225/t for the commodity struck by BHP Billiton.
