Coking Coal shortages in Australia after the Debbie storm has led buyers to look at alternate markets.
The Debbie cyclone has departed, leaving behind a trail of damages to the coal transport infrastructure in the Queensland region of Australia, where 80% Coking Coal mines are situated. Incidentally, the cyclone did not cause any severe damage to the coal mines, but inflicted damages to the rail infrastructure, disrupting coal transportation from the mines to ports.
The damaged rail infrastructure has restricted coal miners from transporting their produce to ports for exporting. An assessment in this context reveals that around 14 MnT of coal( 11.5 MnT Coking and 2.5 MnT Non Coking) will become off-line during the coming weeks. Also, more than 70 cargo ships are waiting for loading coal at the terminals of: Abbot Point, Mackay, Dalrymple Bay and Hay Point.
CURRENT PORT STATUS
Abbot Coal Terminal, which handles around 7% to 8% of the total Coking Coal exports, is in the recovery stage. Coal loading is expected at the terminal by 10 Apr’17 or 11 Apr’17.
Hay Point Coal Terminal is also recovering, and coal loading at the terminal is expected to restart after 6 to 8 weeks. The terminal handles 12% to 15% of total Coking Coal exports.
Dalrymple Bay Coal Terminal is operating with berthing through stockpiles. Coal loading at the terminal is expected after 6 to 8 weeks. The terminal handles 15% to 18% of Coking Coal exports.
At the same time, the Newlands Rail Network servicing the Abbot Pint is not expected to be operational for approximately 3 weeks. The Goonyella Railway System, which services the Dalrymple Bay and Hay Point Coal Terminals, is expected to take around six weeks to be operational.
PRODUCERS DECLARE FORCE MAJEURE
Big miners—BHP Billiton and Glencore—have declared force majeure on coal supplies as damaged railway systems restricted coal transportation. In the same manner, three smaller producers also have declared force majeure on coal supplies, blaming damaged rail lines.
Citing infrastructural constraints, China’s Yancoal Limited has halted output at its Middlemount mine; and QCoal announced inability to deliver coal shipments.
The Jellinbah Group, which owns two mines in the Bowen Basin of the region, has declared force majeure on some, but not all coal shipments.
PRICES EXPECTED TO RISE
Coking Coal prices are bound to rise further due to the supply shortage caused by the export disruptions. Spot prices of the Premium HCC have already cross the USD 180/MT mark.
Interestingly, China has turned towards the US for importing Coking Coal to tide over the temporary supply shortage crisis.
Indian buyers could look towards Mozambique and South Africa for importing Coking Coal until normalcy returns to the Australian market.
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