* Queensland floods continue to support prices
* About 3.6 mt thermal coal exports wiped out-CBA
By Rebekah Kebede
PERTH, Jan 13 Australia's thermal coal prices,
a benchmark for Asia, hovered near $140 per tonne as prices
continued to be supported by flooding in coal-producing
Thermal coal on the globalCOAL Newcastle index for the
week to date was $138.58 per tonne on Wednesday, up from
$129.50 a week earlier as the impacts of the flooding
The index climbed to $141.25 per tonne on Monday, the
highest level seen since September 2008. Recent spot prices
reached $143.50 Newcastle free-on-board for prompt cargoes,
The last of the rains this week isolated New Hope Coal's
Acland and Oakleigh collieries, which both produce
thermal coal and helped sweep prices to $140 per
About 3.6 million tonnes of coal may be removed from
Queensland thermal coal exports, according to a report from
the Commonwealth Bank of Australia (CBA).
But the overall drop in thermal coal exports for Australia
will probably be larger as New South Wales miners due to
substitutions between higher value semi-soft and PCI coals and
thermal coal, CBA said.
Asian buyers, which receive most of the thermal coal
exported by Australia have been hunting for coal to cover
supply disruptions, according to trade sources. [ID:nTOE70A07H]
On Thursday, South Korea's five utilities are buying a
combined up to 1.2 million tonnes of coal in the spot market
for February and March to protect themselves from possible
additional shipment delays from Australia. [ID:nTOE70C057]
Japanese utilities were still looking for cargoes for the
first quarter to make up for the supply disruption in
Australia earlier this week, according to trade sources.
Buyers have been looking to Indonesia, Colombia, and South
Africa for thermal coal alternatives. But supply disruptions
due to weather, especially in Colombia and South Africa, may
hamper buyers' ability to get coal cargo replacement.
However, low freight rates, which have come under pressure
due to the Australian floods, will work to the advantage of
those seeking coal farther afield.[ID:nL3E7CD0MD]
Australian thermal coal prices, however, are likely to
climb even higher.
"Even before the Queensland floods, we were in tight
situation for global," said Yingxi Yu, an analyst for Barclays
Capital in Singapore.
"The Queensland floods have really changed this situation
and I think we might have a much tighter market in the next
months," Yu said.
Wood Mackenzie said earlier this week that prices could
exceed high of $197 per tonne FOB Newcastle seen in 2008.
The spot market has been made even tighter by buyers
pulling a significant volume under their contracted tonnage
from Australia, removing some coal that could have been
destined for the spot market, according to Woodmac.
Coal markets globally will continue to keep an eye on the
Queensland flooding for any indication of further rains or
signs that mines may be recovering. So far there has been
little indication from producers about how long mines will
take to recover, but analysts said it could take as long as
six months. [ID:nL3E7CC0M5]
Buyers will likely still be in the market for spot deals
to replace lost cargoes from Australian thermal coal contracts
that are under force majeure.
(Additional reporting by Meeyoung Cho in SEOUL; Editing by Ed