While the worst of the disaster seems to be over, the logistic problems created by disruption to QR National rail lines and the coal supply chain means it is too early to say whether further global shortages will continue to spur on prices.
Japanese and South Korean steel mills, which normally get 50% of their coking coal from Australia, are now looking to North America, Africa and Indonesia to meet their supply needs, creating a worldwide shortage.
Hard prime coking coal sold for $US320 per tonne on average last week, up from $US280/t the week before, according to UK-based market researcher HIS McCloskey.
“The market’s still trying to understand what the impact will be in terms of volumes removed,”Bloomberg quoted Daniel Brebner, an analyst at Deutsche Bank AG in London, as saying.
“We have seen the worst of the flooding and that’s behind us and really it comes down to, now, how quickly production can get back onstream.”
Prices may rise over the course of the next month and $US350-400/t is “within the realm of possibility”, Brebner said.
Wood Mackenzie believes the price might reach $US400-500/t on the back of the flooding in Queensland.
But Macquarie is taking a more conservative approach.
The broker forecast the state to lose 10 million tonnes of metallurgical coal exports this quarter, while Goldman Sachs and industry researcher IBISWorld predicted a total loss of 15Mt from the wet season.
Macquarie expects premium hard coking coal to hit $US290/t free on board in the June quarter, noting there is an upside risk if there are further disruptions from the ongoing wet season.
The analysts noted there was no purchaser panic as yet, with many steel mills “savvy enough” to source alternative coal supplies for this quarter after rains hit Queensland earlier than normal in the second half of 2010.
Turning to thermal coal from Richards Bay, South Africa, which is Africa’s export facility for thermal coal, the price fell by 6.1% to an average $US120.83/t, McCloskey said.
Shipments from the port climbed 3.8% in 2010 to 63.43Mt, the first annual increase in five years.
