With Much Of Queensland (And Mines) Flooded, Coking Coal Prices Approach $300/Ton

[hatrack]

Australia's torrential rains are driving up global coal prices, as flood damage to the resource-rich northeastern state of Queensland raises fresh questions about the storms' connections to global warming and climate patterns in the Asia-Pacific region.

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Moody's Investors Service projects that the closing of mines in Queensland and damaged rail lines could delay the delivery of 8 million to 15 million metric tons of coal to customers in Asia. Further, the price of metallurgical coal could eclipse record highs hit in 2008. Global prices for seaborne steel-making coal are approaching $300 a metric ton. "The Queensland coal crisis is bad news for steelmakers worldwide, especially for those without supply contracts in place," said Moody's. "The current metallurgical coal price spikes could nearly double the cost of producing a ton of steel."

If the cost of producing steel can't be passed along to builders, that could take the wind out of steel companies fueling infrastructure expansions in Southeast Asia. Worse still is the potential impact on U.S. and European steelmakers that are starting to recover from the West's economic downturn. "For steelmakers, the most ominous news of all comes from weather forecasts, which predict even more rain for Queensland in the coming weeks," says the report.

Thermal coal burned at power plants is also seeing production disruptions, Moody's said, but that will have a smaller impact on global markets. All of the major coal producers in Queensland have declared force majeure, which allows them to miss contract deliveries due to a natural disaster. The coastal port cities, Mackay and Rockhampton, are 100 miles or more from Queensland's coal mines. In early December, as rainwaters had started the monthlong process of flooding mines and washing out rail lines, workers lined up before 1 p.m. at an easy-to-miss storefront depot in Mackay. They waited to load a company bus to the coal mines.

EDIT

http://www.nytimes.com/cwire/2011/01/12/12climatewire-australias-record-rains-squeeze-world-coal-s-38897.html?ref=earth

[madrchsod]

1. i think a russian bought a us coke coal mine last year...

course a russian owns parts of what is left of the us steel industry