Asia Coal-Australia thermal grades at 2010 high above $118/T
* Queensland rain disruptions boost thermal coal prices
* Newcastle export operations unaffected by rains
By Rebekah Kebede
PERTH, Dec 14 (Reuters) - Australia's thermal coal prices, a benchmark for Asia, rose to a 2010 high above $118 per tonne during the past week, as torrential rains in the key Queensland state disrupted output.
Thermal coal on the globalCOAL Newcastle index for the week to date was $118.75 per tonne on Monday and the highest since April 2008. Prices were up from $116.22 a week earlier and up nearly $3 from $115.81 on Friday.
Although Queensland produces mostly coking coal used for steel-making, a number of mines also produce thermal coal used for power generation.
While the focus is currently on Queensland's Bowen Basin, the whole eastern seaboard of Australia has been affected by wet weather and is expected to continue being impacted as the wet season continues, analysts said.
"Wet weather will not only affect metallurgical coal but also thermal. And I have also heard people forecasting cold winters in China and Europe. This fear from the demand side, combined with supply side fears has people scrambling to make sure their stockpiles are full," said one analyst, declining to be identified.
Coal supplies in Australia and Indonesia, both major exporters, will likely remain tight with producers in both countries experiencing output disruptions due to unseasonal wet weather.
"I just don't see much available in the first quarter of next year.... as far as Indonesia and Australia goes, I just don't see the coal," said one producer source.
Still, coal exports from New South Wales' Newcastle Port, the largest thermal coal export port continued normally during the past week, unaffected by the wet weather that disrupted exports in neighbouring Queensland.
A cold snap in Europe has also continued to support prices, but traders said this was primarily due to bullish sentiment due to the freezing weather and coal's reaction to moves in other markets rather than European physical need for coal. ID:nLDE6BC1RR]
Prompt physical coal prices rallied by between $1.50 and $2.00 a tonne, in line with other commodity markets, on strong economic data from China and a rise in oil prices.
Queensland rains and their impact on coal production are likely to dominate the headlines in the coal market. Continuing rains could further disrupt coal production, transport, and exports and deplete stockpiles.
Traders will also keep a close eye on European winter weather, which has played a major role in lifting prices in recent weeks. (Reporting by Rebekah Kebede; Editing by Manash Goswami)
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