The production of coal in Australia is expected to be
disrupted by heavy rains as Australians' bureau of meteorology has issued
warnings for cyclones and said that the chances of above-average rainfall in Queensland
in the last quarter of 2011 are between 65 to 70%.
Leading analysts believe that in
case of any disruption of supply, the prices of coal would jump by 20 percent
to reach $350/MT. This outlook is lent credence by the price changes witnessed last
year, when heavy rains in Australia disrupted the coal mining process and
prices went up by a staggering 16 percent.
However, while analyzing the
outlook, one should keep in mind that last year the price increase was backed
by heavy demand from emerging economies; China and India that are growing at
phenomenal pace. The outlook for the emerging economies in 2012 is not as
stellar as growth rates of both China and India have been revised significantly
downwards.
The advanced economies too are
having a tough time trying to tackle the financial crisis. In fact the demand
for coal is more dependent on the well-being of advanced economies since they
are the driving force behind the export-based emerging countries, in addition
to generating a significant portion of the total demand.
So, coming months are of real
importance as the affects of the factors influencing both the supply (rains)
and demand (global economic growth) of coal would become clear.
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