PERTH Feb 2 Australia's thermal coal prices, a
benchmark for Asia, climbed to more than $127 a tonne week to
date, supported by the ongoing impact of floods in Queensland
state on coal supplies.
Thermal coal on the globalCOAL Newcastle index for the week
to date was $127.88 per tonne on Tuesday, up from $124.44 a week
earlier and up more than $5 from $122.98 on Friday.
"It's definitely very tight. The floods have had their
impact, no doubt about it. It's tight on the ground and most
people feel it," one trade source said.
"It seems to be tight everywhere - I don't think there are
any coal-producing basins globally that are not tight and it's
obviously reflected in the price," the source said.
With supplies scarce and the start of the Chinese New Year,
however, traders said that actual deals done were few and far
"I'm not actually sure how much physical has been done out
of there," a Sydney based trader said. "There aren't that many
physical tonnes to be traded."
The market was also keeping a close eye on Cyclone Yasi,
which was barreling toward Queensland's northern coast and
expected to land on early Thursday.
Floods in Queensland have already caused about 5.5 million
tonnes of Australian production to be lost, according to a
Reuters poll conducted last week.
Although Queensland produces mostly coking coal used for
steelmaking, it does produce some thermal coal and any more
severe weather could cause further production losses and reduce
Xstrata has already shut its 6 million tonne per
annum (mtpa) Collinsville mine, which produces both coking and
thermal coal, ahead of the cyclone. The company is also
considering shutting its Newlands mine, which produces 11 mtpa
of thermal and coking coal for export.
Supplies from neighboring Indonesia are also expected to be
restricted with some Indonesian coal traders have declared force
majeure after a trade rule change, with around 60-70 vessels
stuck in various ports and 3.5 million tonnes unable to be
The market will continue to monitor Cyclone Yasi and watch
for impacts to both coal mines and infrastructure. Any further
coal disruptions could spark another price rally in thermal
In the wake of the Queensland floods, thermal coal prices
climbed nearly 30 percent to over $140 per tonne in mid-January
from about $110 per tonne at the beginning of the year.
With supplies tight, market players will be looking for
Japanese, South Korean, and Taiwanese utilities to begin looking
for supplies later on in the year.
Utilities in the three countries, all major importers of
coal, have indicated that they are well supplied for the first
quarter despite some disrupted supplies from Australia.
However, most have not been in the market for coal supplies
for later on in the year.
"Utilities will get a bit of surprise when they come back
into the market to procure coal for the second quarter because
they will realize there is not a lot of coal left," another
Sydney-based trader said.
(Editing by Ed Lane)