Tuesday, 07 Feb 2012
Dow Jones reported that coking coal prices could correct downward to $200 a metric a ton in 2012, but the caveat is the Australian weather that could determine the supply dynamics in the year ahead.
Mr Gerard McCloskey a consultant and former owner of UK based McCloskey Group told an audience at the Mining Indaba “There will be a correction of prices down to USD 200 per tonne.”
Mr McCloskey added “But it's a great price.”
He noted that the price for coking coal has remained above USD 200 a tonne for six consecutive quarters already.
He noted that the key caveat would be the amount of rain that falls in the Queensland basin in Australia this year. Heavy rainfall could shut down exports from the world's largest seaborne coking coal region as it has done so in the past, most notably last year.
McCloskey said that if Australia were to produce at levels last seen in the first half of 2010 when it was uninterrupted by rain, that's an extra 30 million tonnes coming into a 140 million tonne market.
He told "That's a lot to take, which could result in weaker prices.”
He added that there are already signs of oversupply in the market, with shipments of US coking coal anchored off the coast of China, waiting to be sold.
McCloskey said prices would weaken, but told the audience not to panic because they will still be well above costs.
(Sourced from DJ News)
Showing posts with label Australia floods. Show all posts
Showing posts with label Australia floods. Show all posts
Tuesday, February 7, 2012
Monday, February 6, 2012
4 coal mines shut in Australia on floods
Monday, 06 Feb 2012
Reuters reported that heavy rains shut four coal mines in eastern Australia on Friday as military helicopters evacuated stranded residents from inundated towns and authorities warned of further flash flooding.
Emergency services authorities said that more than 11,000 people in Queensland state have been isolated by the flooding and thousands had been evacuated.
Whitehaven Coal said it had shut four mines due to heavy rainfall, but the mines were not flooded and no equipment had been damaged. Other miners and liquefied natural gas producers reported their operations had so far not been affected.
The Queensland Resources Council said many of the state's mines were still carrying water from last year's wet season and it was monitoring mining areas.
A spokeswoman for Xstrata, the world's largest thermal coal exporter, which has mines in both New South Wales and Queensland, said it was not aware of any impact due to the wet weather. In the northwestern district of Queensland, Xstrata said it had resumed operations at its Ernest Henry copper mine following a short suspension last week to ensure the safety of staff.
Another coal major, Rio Tinto, said it would not comment on production.
The Bureau of Meteorology said heavy rains were likely to add to already overflowing rivers and warned of localised flash flooding. It cancelled a severe weather warning for parts of New South Wales.
The 2011 floods also damaged crops and inundated coal mines, pushing up prices for coal. Australia is the world's largest coal exporter and accounts for roughly two-thirds of global trade of coking coal, used for steel production.
(Sourced from Reuters)
Reuters reported that heavy rains shut four coal mines in eastern Australia on Friday as military helicopters evacuated stranded residents from inundated towns and authorities warned of further flash flooding.
Emergency services authorities said that more than 11,000 people in Queensland state have been isolated by the flooding and thousands had been evacuated.
Whitehaven Coal said it had shut four mines due to heavy rainfall, but the mines were not flooded and no equipment had been damaged. Other miners and liquefied natural gas producers reported their operations had so far not been affected.
The Queensland Resources Council said many of the state's mines were still carrying water from last year's wet season and it was monitoring mining areas.
A spokeswoman for Xstrata, the world's largest thermal coal exporter, which has mines in both New South Wales and Queensland, said it was not aware of any impact due to the wet weather. In the northwestern district of Queensland, Xstrata said it had resumed operations at its Ernest Henry copper mine following a short suspension last week to ensure the safety of staff.
Another coal major, Rio Tinto, said it would not comment on production.
The Bureau of Meteorology said heavy rains were likely to add to already overflowing rivers and warned of localised flash flooding. It cancelled a severe weather warning for parts of New South Wales.
The 2011 floods also damaged crops and inundated coal mines, pushing up prices for coal. Australia is the world's largest coal exporter and accounts for roughly two-thirds of global trade of coking coal, used for steel production.
(Sourced from Reuters)
Australian floods force thousands from their homes
Mon Feb 6, 2012
* One dead in flooding, thousands evacuated
* Coal industry largely unaffected by floods
* Flooding causes damage to agriculture, property
PERTH, Feb 6 (Reuters) - Thousands of Australians were forced from their homes on Monday because of floods that have risen to record levels in some areas and killed one person, and authorities issued warnings for more than a dozen rivers in Queensland and New South Wales states.
Australia's coal industry, which is concentrated in Queensland and New South Wales, was largely unaffected, easing concern about a repeat of last year's disastrous floods that sent global coal prices soaring.
But heavy rain is expected to take a toll on the region's agriculture, particularly on cotton, sugarcane, soybean and corn.
About 2,500 people were evacuated from the Queensland town of St. George, where flooding is expected to reach a record level of 14 metres (45 feet) or higher, state police said.
"We're hearing from people whose families have lived on the property for 100 or more years who've never seen water in their homes who have now got water up to the roof," Queensland Premier Anna Bligh told Sky news.
"So we know that something that's never been seen before is on its way."
St. George was also hit in 2011, when flash floods across Queensland and New South Wales killed about 35 people, swamped 30,000 houses, and wiped out roads, bridges and rail lines.
The flooding across the two states this year has resulted in tens of thousands of people being cut off in the last few days, with some having to battle with deadly snakes as they scrambled for dry ground.
The Australian Bureau of Meteorology has forecast that flooding will continue for weeks in some areas.
The town of Moree, the centre of the New South Wales' cotton industry was cut in half by record floodwaters, and some estimated that each farm in the area could lose hundreds of thousands of dollars worth of crops.
Australia is the world's largest coal exporter and accounts for roughly two-thirds of global trade of coking coal, used for steel production. The 2011 floods pushed up global coal prices as production was brought to a near standstill.
"The coal mines themselves are not experiencing any difficulties," Queensland Resources Council chief executive Michael Roche said.
"So far, the Queensland coal industry, as far as we are aware, has missed the flooding."
On Friday, Whitehaven Coal said it had shut four mines because of heavy rain, but the mines were not flooded and no equipment had been damaged.
Global miner Xstrata said there was no impact on its operations.
"It's business as usual," spokeswoman Kathryn Lamond said.
But the industry was still concerned about disruption if there was no let-up in the rain and more flooding, Roche said.
Many mines are still carrying significant volumes of water from last year's floods, so more heavy rain is a danger.
Storm damage was estimated to have cut Australia's commodity-weighted economy's gross domestic product growth (GDP) by A$20 billion, or 1.5 percent, in the 2010-2011 financial year.
(sourced Reuters.com)
* One dead in flooding, thousands evacuated
* Coal industry largely unaffected by floods
* Flooding causes damage to agriculture, property
PERTH, Feb 6 (Reuters) - Thousands of Australians were forced from their homes on Monday because of floods that have risen to record levels in some areas and killed one person, and authorities issued warnings for more than a dozen rivers in Queensland and New South Wales states.
Australia's coal industry, which is concentrated in Queensland and New South Wales, was largely unaffected, easing concern about a repeat of last year's disastrous floods that sent global coal prices soaring.
But heavy rain is expected to take a toll on the region's agriculture, particularly on cotton, sugarcane, soybean and corn.
About 2,500 people were evacuated from the Queensland town of St. George, where flooding is expected to reach a record level of 14 metres (45 feet) or higher, state police said.
"We're hearing from people whose families have lived on the property for 100 or more years who've never seen water in their homes who have now got water up to the roof," Queensland Premier Anna Bligh told Sky news.
"So we know that something that's never been seen before is on its way."
St. George was also hit in 2011, when flash floods across Queensland and New South Wales killed about 35 people, swamped 30,000 houses, and wiped out roads, bridges and rail lines.
The flooding across the two states this year has resulted in tens of thousands of people being cut off in the last few days, with some having to battle with deadly snakes as they scrambled for dry ground.
The Australian Bureau of Meteorology has forecast that flooding will continue for weeks in some areas.
The town of Moree, the centre of the New South Wales' cotton industry was cut in half by record floodwaters, and some estimated that each farm in the area could lose hundreds of thousands of dollars worth of crops.
Australia is the world's largest coal exporter and accounts for roughly two-thirds of global trade of coking coal, used for steel production. The 2011 floods pushed up global coal prices as production was brought to a near standstill.
"The coal mines themselves are not experiencing any difficulties," Queensland Resources Council chief executive Michael Roche said.
"So far, the Queensland coal industry, as far as we are aware, has missed the flooding."
On Friday, Whitehaven Coal said it had shut four mines because of heavy rain, but the mines were not flooded and no equipment had been damaged.
Global miner Xstrata said there was no impact on its operations.
"It's business as usual," spokeswoman Kathryn Lamond said.
But the industry was still concerned about disruption if there was no let-up in the rain and more flooding, Roche said.
Many mines are still carrying significant volumes of water from last year's floods, so more heavy rain is a danger.
Storm damage was estimated to have cut Australia's commodity-weighted economy's gross domestic product growth (GDP) by A$20 billion, or 1.5 percent, in the 2010-2011 financial year.
(sourced Reuters.com)
Wednesday, January 26, 2011
Floods forces Asian steel mills to look elsewhere for coking coal
Wednesday, 26 Jan 2011Japanese and South Korea have been seeking alternative suppliers of coking coal for their steel mills since the scale of the Australian floods became apparent earlier this month.
Japanese steel mills, which last year secured more than 50% of their coking coal from Australia, are looking to North America, Africa and Indonesia. South Korea is the second-biggest importer of Australian coal after Japan.
Japanese steel mills, which last year secured more than 50% of their coking coal from Australia, are looking to North America, Africa and Indonesia. South Korea is the second-biggest importer of Australian coal after Japan.
Mongolia which has just begun to tap the world's second biggest coal seam is also expected to be a threat to Australia's market share.
Chinese imports of coking coal increased from 6.85 million tonnes in 2008 to 34.49 million in 2009. But with the world's biggest coal reserves, China, the world biggest steelmaker, has only recently become a coal importer.
Galaxy Futures analyst Ms Liu Huiru said that Australia provided about 38% of China's coal imports. She said that "Along with the recovery of the international economy, China will face competition from other countries in demand for coke. Imports from Australia, the US and Canada might decrease, while imports from Mongolia might increase, and the same with Russia.”
Mysteel.com analyst Zhu Xi'an said that major coking suppliers in China's coal producing provinces of Shanxi and Hebei had raised prices about CNY 100 (USD 15.40) a tonne since the start of the year, especially since news of the floods spread.
He said that "So far the floods are a short term effect, but if the situation in Australia does not improve by March the market here might have a stronger response."
Chinese imports of coking coal increased from 6.85 million tonnes in 2008 to 34.49 million in 2009. But with the world's biggest coal reserves, China, the world biggest steelmaker, has only recently become a coal importer.
Galaxy Futures analyst Ms Liu Huiru said that Australia provided about 38% of China's coal imports. She said that "Along with the recovery of the international economy, China will face competition from other countries in demand for coke. Imports from Australia, the US and Canada might decrease, while imports from Mongolia might increase, and the same with Russia.”
Mysteel.com analyst Zhu Xi'an said that major coking suppliers in China's coal producing provinces of Shanxi and Hebei had raised prices about CNY 100 (USD 15.40) a tonne since the start of the year, especially since news of the floods spread.
He said that "So far the floods are a short term effect, but if the situation in Australia does not improve by March the market here might have a stronger response."
(Sourced from The Australian)
Friday, January 21, 2011
Australia's Aquila restarts Issac Plains mine after floods
Thu Jan 20, 2011 11:12pm GMT
SYDNEY Jan 21 (Reuters) - Australia's Aquila Resources said production has restarted at its Issac Plains metallurgical and thermal coal mine following recent flooding in Queensland state.
However, force majeure remained in place on some sales contracts as resumption of full production will take some time while waters are pumped out, Aquila said.
The mine is a 50-50-joint venture between Aquila and Brazil's Vale
(source:Reuters, Reporting by James Regan; editing by Balazs Koranyi)
Monday, January 17, 2011
Analysts see coking coal shortages
Monday, 17 Jan 2011
Bloomberg reported that several analysts’ sees floods in Australia disrupting coking coal supplies and boosting steel making costs.
RBS Equities analyst Mr Rahul Jain without giving estimates said that stoppages in coal shipments from Queensland State under force majeure clauses are likely to create a shortage in the April to June quarter, forcing steelmakers to lower production.
Mr Rakesh Arora an analyst at Macquarie Group Ltd in Mumbai said that steelmakers may also raise prices to cover cost increases.
Mr Giriraj Daga an analyst at Nirmal Bang Securities Ltd in Mumbai said that the worst floods in 50 years in Australia’s largest coal exporting region is creating a raw material shortage in India, where steel demand is forecast to grow 10% in the year to March 31. Profit margins at Indian steelmakers may shrink more than 10% next quarter because of an increase in fuel costs.
Mr Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd in Melbourne said that Queensland, which accounts for about 20% of Australia’s AUD 1.3 trillion economy is losing AUD 480 million a week in coal exports
According to Mr Petersfield Englandbased researcher IHS McCloskey, Australian coking coal rose to USD 265 a tonne on average last week from USD 248.
Sourced from Bloomberg
Bloomberg reported that several analysts’ sees floods in Australia disrupting coking coal supplies and boosting steel making costs.
RBS Equities analyst Mr Rahul Jain without giving estimates said that stoppages in coal shipments from Queensland State under force majeure clauses are likely to create a shortage in the April to June quarter, forcing steelmakers to lower production.
Mr Rakesh Arora an analyst at Macquarie Group Ltd in Mumbai said that steelmakers may also raise prices to cover cost increases.
Mr Giriraj Daga an analyst at Nirmal Bang Securities Ltd in Mumbai said that the worst floods in 50 years in Australia’s largest coal exporting region is creating a raw material shortage in India, where steel demand is forecast to grow 10% in the year to March 31. Profit margins at Indian steelmakers may shrink more than 10% next quarter because of an increase in fuel costs.
Mr Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd in Melbourne said that Queensland, which accounts for about 20% of Australia’s AUD 1.3 trillion economy is losing AUD 480 million a week in coal exports
According to Mr Petersfield Englandbased researcher IHS McCloskey, Australian coking coal rose to USD 265 a tonne on average last week from USD 248.
Sourced from Bloomberg
Sunday, January 16, 2011
Recovery of Australian coal mines need months - Report
Sunday, 16 Jan 2011
Reuters reported that coal mines in Australia's flood ravaged Queensland state could take up to six months to return to full operation as the lack of water pumping and storage capacity is slowing efforts to clear pits.
Mr Dave Walker, who manages water pumping for Total Water Management, a mining contractor said that “There's just nothing left to hire, all the pumps are working non stop. It could be months before all the water is out.”
Mr Walker said that “Production has restarted in a few places and the lucky ones will be clear in two to four weeks but some mines will take three to six months.”
Mr Warrick Ryan, an Operations Manager at Bowen Basin Hire, which rents out pumping equipment, said the pump capacity is only part of the issue as many mines simply lack the water storage capacity to clear pits.
He said “You can't just run the water into the creek, you have to store it somewhere and many places are running out. I'd say it'll be three to five months before all the water's knocked out if there's no more rain.”
As per report, open pit mines bore the brunt of the flooding, while underground deposits largely escaped damage.
Courtesy news by Reuters
Reuters reported that coal mines in Australia's flood ravaged Queensland state could take up to six months to return to full operation as the lack of water pumping and storage capacity is slowing efforts to clear pits.
Mr Dave Walker, who manages water pumping for Total Water Management, a mining contractor said that “There's just nothing left to hire, all the pumps are working non stop. It could be months before all the water is out.”
Mr Walker said that “Production has restarted in a few places and the lucky ones will be clear in two to four weeks but some mines will take three to six months.”
Mr Warrick Ryan, an Operations Manager at Bowen Basin Hire, which rents out pumping equipment, said the pump capacity is only part of the issue as many mines simply lack the water storage capacity to clear pits.
He said “You can't just run the water into the creek, you have to store it somewhere and many places are running out. I'd say it'll be three to five months before all the water's knocked out if there's no more rain.”
As per report, open pit mines bore the brunt of the flooding, while underground deposits largely escaped damage.
Courtesy news by Reuters
Friday, January 14, 2011
Coal at 28-Month High to Beat Oil, Gas on Australia Floods: Energy Markets
Source: Bloomberg, by Dinakar Sethuraman and Ben Sharples - Jan 13, 2011
Coal for producing power may beat oil and natural gas this year as disruptions from Australia to South Africa drive prices for the fuel to a 28-month high.
Thermal coal may climb about 14 percent to $150 a metric ton in coming weeks, while increased stockpiles limit gains for oil and natural gas, Joachim Azria, a New York-based analyst at Credit Suisse Group AG, said in a Jan. 10 report. Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd., said on Jan. 4 coal may advance as much as 15 percent. Prices at the Australian port of Newcastle were at $131.80 a ton on Jan. 7, the highest since September 2008, according to IHS McCloskey data.
“There’s definitely more possible upside in the coal market at the moment than there is in the oil market,” Ben Westmore, an energy economist at National Australia Bank Ltd. in Melbourne, said in a Jan. 12 interview.
Spot prices at Newcastle, the world’s biggest coal-export facility, have jumped 20 percent in less than six weeks, according to Petersfield, England-based McCloskey. The worst floods in Queensland state in 50 years shut mines and closed transport lines, disrupting supplies. Coal shipped via South Africa’s Richards Bay, Africa’s largest terminal for the fuel, gained about 18 percent. Oil in New York rose 5.5 percent in the same period, while natural gas added 3.3 percent.
“Coal should continue to outperform oil and gas in 2011,” said Azria, who estimates as much as 2 million tons of thermal supplies have been disrupted by the Australian floods.
Asian Economies
Australia & New Zealand Banking Group Ltd. increased its spot thermal coal price forecast to $140 a ton, from $120 a ton, for the three months to March 31, Mark Pervan, head of commodity research in Melbourne, said in a note on Jan. 7.
Demand for coal is growing faster than oil and gas as China and India boost imports to feed economies that are outpacing the rest of the world. China, which relies on the fuel for 70 percent of its energy, may increase overseas purchases by 30 percent this year, according to Lau, while imports to India may double, India Coal Market Watch said. Coal will remain the world’s most-used fuel for power generation through 2035, the International Energy Agency said in November.
Prices at Newcastle jumped 43 percent last year, while oil futures in New York gained 15 percent. Natural gas dropped 21 percent.
While coal is rising, the fuel is still more than 30 percent below the record set more than two years ago. Newcastle coal traded at $192.50 a ton in July 2008 as floods hampered supplies, according to McCloskey data on Bloomberg.
Disaster Zone
An area bigger than Texas and California covering more than 75 percent of Australia’s Queensland state has been declared a disaster zone. Fifteen people are dead and 61 missing after a flash flood smashed through Toowoomba on Jan. 10, taking the total killed to 26 since the deluge started in November. Brisbane, Australia’s third-largest city, was inundated with muddy water, flooding 15,000 properties, smashing roads and shuttering the city center.
The flooding has cut coal output by about 4.5 million tons since the start of December, about 3 million tons of which is coking coal, used by steelmakers, and the rest thermal coal, according to Colin Hamilton, a London-based analyst at Macquarie Group Ltd. The state exports about 50 million tons of thermal coal a year, according to Macquarie.
“It was a perfect storm for coal, with cold weather in the northern hemisphere boosting demand and excessive rainfall first in Colombia, Indonesia and now in Australia creating vast shortfalls in supply,” Amrita Sen, a London-based analyst for Barclays Plc, said in an e-mail on Jan. 10.
World’s Biggest Supplier
Indonesia, the world’s biggest supplier of thermal coal, increased the reference price for the fuel by 8.7 percent in January to $112.4 a ton, the Directorate General of Coal and Minerals said on its website. Prices have climbed 25 percent since September.
Coal shipped through Richards Bay was disrupted last month by derailments that depleted stockpiles at the terminal, threatening to curtail first-quarter exports, port Chief Executive Officer Raymond Chirwa said on Jan. 4. India bought almost a third of Richards Bay’s exports last year.
Prices at the port were at $126.39 a ton on Jan. 7, after rising 60 percent last year.
Asian Driver
“You have strong underlying fundamentals for coal,” said Emmanuel Fages, a Paris-based analyst at Societe Generale SA. “Bottlenecks remain on the supply side, so Asia is sucking up resources even more from traditional suppliers of the West, like Colombia or South Africa. You are bound see price increases over the medium term.”
China’s coal imports may rise to 210 million tons in 2011 from an estimated 166 million last year, according to Lau. The country, which became a net importer of the fuel for the first time in 2009, boosted overseas purchases by 35 percent through November 2010, according to government data.
While oil imports to China will continue to increase this year, they may not match last year’s 17 percent pace, as growth in refining capacity slows, Lawrence Eagles, a New York-based analyst with JPMorgan Chase & Co., said in a Jan. 10 note.
India may double imports of thermal coal to 104 million tons in the year ending March 2012, according to Coal Minister Sriprakash Jaiswal. That compares with 3 percent growth in oil consumption, according to the Paris-based IEA.
“Long-term fundamentals for coal are more robust than for oil or gas, because the price increases are really driven by speculative expectations at present for oil and gas,” Fages said. If growth slows in China, it would take only about a month for oil and gas “to come down to much lower levels,” he said.
Reporter:Dinakar Sethuraman in Singapore at dinakar@bloomberg.net
Coal for producing power may beat oil and natural gas this year as disruptions from Australia to South Africa drive prices for the fuel to a 28-month high.
Thermal coal may climb about 14 percent to $150 a metric ton in coming weeks, while increased stockpiles limit gains for oil and natural gas, Joachim Azria, a New York-based analyst at Credit Suisse Group AG, said in a Jan. 10 report. Helen Lau, a Hong Kong-based analyst at UOB Kay Hian Ltd., said on Jan. 4 coal may advance as much as 15 percent. Prices at the Australian port of Newcastle were at $131.80 a ton on Jan. 7, the highest since September 2008, according to IHS McCloskey data.
“There’s definitely more possible upside in the coal market at the moment than there is in the oil market,” Ben Westmore, an energy economist at National Australia Bank Ltd. in Melbourne, said in a Jan. 12 interview.
Spot prices at Newcastle, the world’s biggest coal-export facility, have jumped 20 percent in less than six weeks, according to Petersfield, England-based McCloskey. The worst floods in Queensland state in 50 years shut mines and closed transport lines, disrupting supplies. Coal shipped via South Africa’s Richards Bay, Africa’s largest terminal for the fuel, gained about 18 percent. Oil in New York rose 5.5 percent in the same period, while natural gas added 3.3 percent.
“Coal should continue to outperform oil and gas in 2011,” said Azria, who estimates as much as 2 million tons of thermal supplies have been disrupted by the Australian floods.
Asian Economies
Australia & New Zealand Banking Group Ltd. increased its spot thermal coal price forecast to $140 a ton, from $120 a ton, for the three months to March 31, Mark Pervan, head of commodity research in Melbourne, said in a note on Jan. 7.
Demand for coal is growing faster than oil and gas as China and India boost imports to feed economies that are outpacing the rest of the world. China, which relies on the fuel for 70 percent of its energy, may increase overseas purchases by 30 percent this year, according to Lau, while imports to India may double, India Coal Market Watch said. Coal will remain the world’s most-used fuel for power generation through 2035, the International Energy Agency said in November.
Prices at Newcastle jumped 43 percent last year, while oil futures in New York gained 15 percent. Natural gas dropped 21 percent.
While coal is rising, the fuel is still more than 30 percent below the record set more than two years ago. Newcastle coal traded at $192.50 a ton in July 2008 as floods hampered supplies, according to McCloskey data on Bloomberg.
Disaster Zone
An area bigger than Texas and California covering more than 75 percent of Australia’s Queensland state has been declared a disaster zone. Fifteen people are dead and 61 missing after a flash flood smashed through Toowoomba on Jan. 10, taking the total killed to 26 since the deluge started in November. Brisbane, Australia’s third-largest city, was inundated with muddy water, flooding 15,000 properties, smashing roads and shuttering the city center.
The flooding has cut coal output by about 4.5 million tons since the start of December, about 3 million tons of which is coking coal, used by steelmakers, and the rest thermal coal, according to Colin Hamilton, a London-based analyst at Macquarie Group Ltd. The state exports about 50 million tons of thermal coal a year, according to Macquarie.
“It was a perfect storm for coal, with cold weather in the northern hemisphere boosting demand and excessive rainfall first in Colombia, Indonesia and now in Australia creating vast shortfalls in supply,” Amrita Sen, a London-based analyst for Barclays Plc, said in an e-mail on Jan. 10.
World’s Biggest Supplier
Indonesia, the world’s biggest supplier of thermal coal, increased the reference price for the fuel by 8.7 percent in January to $112.4 a ton, the Directorate General of Coal and Minerals said on its website. Prices have climbed 25 percent since September.
Coal shipped through Richards Bay was disrupted last month by derailments that depleted stockpiles at the terminal, threatening to curtail first-quarter exports, port Chief Executive Officer Raymond Chirwa said on Jan. 4. India bought almost a third of Richards Bay’s exports last year.
Prices at the port were at $126.39 a ton on Jan. 7, after rising 60 percent last year.
Asian Driver
“You have strong underlying fundamentals for coal,” said Emmanuel Fages, a Paris-based analyst at Societe Generale SA. “Bottlenecks remain on the supply side, so Asia is sucking up resources even more from traditional suppliers of the West, like Colombia or South Africa. You are bound see price increases over the medium term.”
China’s coal imports may rise to 210 million tons in 2011 from an estimated 166 million last year, according to Lau. The country, which became a net importer of the fuel for the first time in 2009, boosted overseas purchases by 35 percent through November 2010, according to government data.
While oil imports to China will continue to increase this year, they may not match last year’s 17 percent pace, as growth in refining capacity slows, Lawrence Eagles, a New York-based analyst with JPMorgan Chase & Co., said in a Jan. 10 note.
India may double imports of thermal coal to 104 million tons in the year ending March 2012, according to Coal Minister Sriprakash Jaiswal. That compares with 3 percent growth in oil consumption, according to the Paris-based IEA.
“Long-term fundamentals for coal are more robust than for oil or gas, because the price increases are really driven by speculative expectations at present for oil and gas,” Fages said. If growth slows in China, it would take only about a month for oil and gas “to come down to much lower levels,” he said.
Reporter:Dinakar Sethuraman in Singapore at dinakar@bloomberg.net
Wednesday, January 12, 2011
Flood risk shuts Port of Brisbane
Brisbane (Energy Publishing) - 11, Jan.2011
In yet another blow to the coal industry, the Port of Brisbane was shut today as the city began to prepare for the possibility of flooding in the CBD.
With Brisbane’s Wivenhoe Dam overflowing and an imminent King Tide expected, a massive flow of water is surging down the Brisbane River, currently flowing out at more than 3 knots at the port. This has made it dangerous for ships to load and all ships were ordered out to sea.
Brisbane port coal terminal services south-east Queensland mines, predominantly the thermal mines of New Hope (see earlier story today) which also owns the terminal. Roughly 10Mtpa is exported from the port.
Meanwhile, businesses in the centre of town began sending employees home around mid-morning.
In yet another blow to the coal industry, the Port of Brisbane was shut today as the city began to prepare for the possibility of flooding in the CBD.
With Brisbane’s Wivenhoe Dam overflowing and an imminent King Tide expected, a massive flow of water is surging down the Brisbane River, currently flowing out at more than 3 knots at the port. This has made it dangerous for ships to load and all ships were ordered out to sea.
Brisbane port coal terminal services south-east Queensland mines, predominantly the thermal mines of New Hope (see earlier story today) which also owns the terminal. Roughly 10Mtpa is exported from the port.
Meanwhile, businesses in the centre of town began sending employees home around mid-morning.
Queensland's southeastern mines are stopped
News via Coalportal.com Jan 12, 2011
Queensland’s continuing flood crisis has now hit coal mining in the state’s southeast, with the major miner, New Hope Corporation, confirming a halt to operations, sources reported.
New Hope says that while its two open cut pits, New Acland and Oakleigh in the Clarence-Moreton Basin west of Brisbane, are operational, floods have stopped coal shipments, either by road or rail, it noted.
The two mines account for New Hope’s 5Mtpa output, most of it exported through the New Hope-owned Brisbane port coal terminal.
New Hope’s confirmation follows news that global giant Peabody Energy has suspended mining at its Wilkie Creek thermal coal export operation in the Surat Basin that also ships through Brisbane - and a halt to rail shipments to the port from the Syntech Resources company’s Surat Basin Cameby Downs mine, which shipped its first export coal to Brisbane less than two months ago.
Queensland’s continuing flood crisis has now hit coal mining in the state’s southeast, with the major miner, New Hope Corporation, confirming a halt to operations, sources reported.
New Hope says that while its two open cut pits, New Acland and Oakleigh in the Clarence-Moreton Basin west of Brisbane, are operational, floods have stopped coal shipments, either by road or rail, it noted.
The two mines account for New Hope’s 5Mtpa output, most of it exported through the New Hope-owned Brisbane port coal terminal.
New Hope’s confirmation follows news that global giant Peabody Energy has suspended mining at its Wilkie Creek thermal coal export operation in the Surat Basin that also ships through Brisbane - and a halt to rail shipments to the port from the Syntech Resources company’s Surat Basin Cameby Downs mine, which shipped its first export coal to Brisbane less than two months ago.
Peabody Energy, Rio Tinto, BHP Billiton, Xstrata and Anglo American have all declared force majeure in the region Queensland
Queensland floods in 2008 left steel producers with a threefold increase in annual contract prices to about US$300 a ton.
Queensland accounts for the majority of the premium hard coking coal supply on a global seaborne basis. Queensland is the biggest global exporter of coal used in steel production.
Collins Stewart believes the current situation is worse than the 2008 flooding, as more mines and transportation infrastructure have been affected this time. About 37% of the world’s traded coking coal has been affected, according to Macquarie.
Mines affected in 2008 took at least six months to recover from the disruption and return to full capacity. The cumulative loss of production is expected to maintain upward pressure on spot prices for several weeks.
Coal stockpiles at Gladstone harbor in Queensland are very low after flooding shut a rail network. Eighteen ships are waiting to load and 12 more are expected at the harbor in the next 10 days.
Meanwhile, Queensland coal miner Macarthur Coal stated on Wednesday that its now expecting first-half profit at the low end of its forecast range due to production issues.
Peabody Energy, Rio Tinto, BHP Billiton, Xstrata and Anglo American have all declared force majeure in the region, which means they won’t be able to meet contractual obligations due to unforeseen circumstances.
About 98 million tons of capacity to produce steelmaking coal is under force majeure, equivalent to 73% of Queensland exports.
Australia shipped 259 million tons of coal for steel and power in 2009, according to the World Coal Association.
Australia is the largest producer of coal used in steelmaking, contributing more than 40% of the global seaborne trade, according to Deutsche Bank AG. The country is the second-largest exporter of the commodity after Indonesia.
Coking coal suppliers traditionally hold annual talks with steelmakers to fix benchmark contracts for the 12 months from April 1.
Steelmakers may agree to monthly pricing for coking coal, as proposed by BHP, in the current environment rather than locking in US$300 a ton for a whole quarter, Macquarie says.
There will be a material impact on Australian exports of coking coal, even if no further rain falls, Morgan Stanley adds.
Flooding is also affecting thermal coal, used by power stations, driving the price of supplies at the port of Newcastle in Australia’s New South Wales, the benchmark for Asia, to the most in 27 months.
Prices jumped 3% to US$126.10 a ton in the week ended Dec. 31, the most since Oct. 2008.
Queensland accounts for the majority of the premium hard coking coal supply on a global seaborne basis. Queensland is the biggest global exporter of coal used in steel production.
Collins Stewart believes the current situation is worse than the 2008 flooding, as more mines and transportation infrastructure have been affected this time. About 37% of the world’s traded coking coal has been affected, according to Macquarie.
Mines affected in 2008 took at least six months to recover from the disruption and return to full capacity. The cumulative loss of production is expected to maintain upward pressure on spot prices for several weeks.
Coal stockpiles at Gladstone harbor in Queensland are very low after flooding shut a rail network. Eighteen ships are waiting to load and 12 more are expected at the harbor in the next 10 days.
Meanwhile, Queensland coal miner Macarthur Coal stated on Wednesday that its now expecting first-half profit at the low end of its forecast range due to production issues.
Peabody Energy, Rio Tinto, BHP Billiton, Xstrata and Anglo American have all declared force majeure in the region, which means they won’t be able to meet contractual obligations due to unforeseen circumstances.
About 98 million tons of capacity to produce steelmaking coal is under force majeure, equivalent to 73% of Queensland exports.
Australia shipped 259 million tons of coal for steel and power in 2009, according to the World Coal Association.
Australia is the largest producer of coal used in steelmaking, contributing more than 40% of the global seaborne trade, according to Deutsche Bank AG. The country is the second-largest exporter of the commodity after Indonesia.
Coking coal suppliers traditionally hold annual talks with steelmakers to fix benchmark contracts for the 12 months from April 1.
Steelmakers may agree to monthly pricing for coking coal, as proposed by BHP, in the current environment rather than locking in US$300 a ton for a whole quarter, Macquarie says.
There will be a material impact on Australian exports of coking coal, even if no further rain falls, Morgan Stanley adds.
Flooding is also affecting thermal coal, used by power stations, driving the price of supplies at the port of Newcastle in Australia’s New South Wales, the benchmark for Asia, to the most in 27 months.
Prices jumped 3% to US$126.10 a ton in the week ended Dec. 31, the most since Oct. 2008.
Floods in Australia: what legal implications for Commodity Traders?
Courtsey Reed Smith, The business of relationships, Publication date: Jan 07, 2011
Australia has endured one of the wettest spring seasons in its recorded history. Heavy rain in November and December in eastern Australia caused river levels to rise and flood plains to become saturated. This led to widespread localised flooding and to the severe floods reported by the global media over the New Year period.The most severely affected area covers a wide swathe of the middle part of Queensland State. At least seven major rivers in the area are reported to have flooded. At the time of writing the water levels are still high; states of emergency are in effect across many local authorities in the affected area. Water levels are expected to recede in the coming days but not to return to normal levels for weeks to come.Affected commoditiesBeyond the damage to life, property and infrastructure, the severe rain has impacted Australia's important commodities exporting business. Wheat and sugar trades are amongst those affected. Damage to crops and inland transportation problems have lead to fewer stocks being available for export and a consequential rise in market prices. US Wheat futures were reported to be trading at a five-month high this week following concerns about damage to Australian (the world's fourth largest wheat exporter) crops. Australian sugar export forecasts for this year are reported to have been cut by 25%, exacerbating demand pressure and contributing to raw sugar prices reaching a 30 year high. Conversely, dry bulk freight prices have been forced down by the reduction in cargoes available for seaborne carriage. The Baltic Exchange's dry bulk freight index reached a 20 month low this week.The most seriously affected trade is coal. Coal is Australia's biggest export business, accounting for approximately a quarter of Australia's total goods and services exports over recent years. Australia is the largest exporter of coal in the world, exporting 28% of the world total in 2008-2009, with exporting capacity increasing since then.Australia produces both thermal coal (used in the power generating industry) and metallurgical "coking" coal (used in the production of steel). All of Australia's export output of both types of coal is mined in Queensland and New South Wales in eastern Australia, with Queensland producing the greater quantity. The majority of Queensland's coal is coking coal. Its coking coal exports account for approximately two thirds of world trade. The vast majority of Australian coal imported into China, India and Europe is coking coal. Significant quantities are also exported to Japan, Korea and Taiwan. With demand still strong in China and India in particular and disruptions prevalent elsewhere in the major producing areas (Columbia - heavy rains; Russia - severe drought and now severe cold) analysts are busy speculating on the effect the disruptions to the world's coking coal supply will have on prices of coal and steel, which relies on coking coal availability. Prices of both types of coal have already risen to recent highs and many predict further increases into 2011.Our concern in this article is with the legal implications of the supply disruptions for trading contracts. An English law application is assumed but many of the legal principles will be similar under Australian law governed contracts.Force Majeure?The flooding has affected coal exports in three ways: (1) disruption to production due to flooding at producing mines; (2) disruption to the transportation of coal from mines to export terminals; (3) disruption to loading operations at export terminals.It has been widely reported that many of the major coal producers operating in the area have "declared force majeure" in order to protect themselves from defaulting on contractual obligations to supply coal from mines affected by the flooding. The mine operators reported to have done so include BHP Billiton, Rio Tinto, Anglo American, Xstrata, Peabody Energy, Macarthur Coal, Aquila Resources - Vale, Cockatoo Coal and Wesfarmers. In total the mines affected are estimated to produce over a third of Australia's annual production of coal.Coal is transported from the mines primarily by rail. The rail network is among the busiest for freight traffic in the world with trains of between 1 and 2 kilometres in length carrying 8,000-10,000 tonnes of coal operating 24 hours a day. The main rail operator in the area, QR National has been forced to close parts of three of the four major coal transport lines in the area (Blackwater, Moura, Goonyella) due to the floods. Those closures have restricted or stopped completely the supply of coal to export terminals.Four export terminals are reported to have been affected: Abbot Point, Dalrymple Bay, Hay Point and RG Tanna (Gladstone). At the time of writing supplies of thermal coal to the major thermal coal export terminal at Newcastle in New South Wales do not appear to have been severely affected. At the affected terminals shortages of coal have been reported due to the lack of stock arriving on the rail system and stockpiles being depleted. RG Tanna terminal announced that it would operate at 50% capacity last week. As at the time of writing, the terminal is reporting that coal stocks are "extremely low" with no more coal expected on the Moura rail system until the end of next week. 18 vessels are waiting at the port with a further 12 expected over the next week. Dalrymple Bay is said to have been operating at 60-70% of capacity since 1 January, with stocks due to run out this weekend. Of those stocks that are available for export issues may arise in relation to the condition and specification of the "wet" coal.Who can rely on force majeure?Force Majeure is a concept of French law. It is similar to the English law doctrine of frustration of contract (events arising subsequent to the execution of the contract that, without fault of either party, render performance of the contract impossible or radically different from that which was envisaged). Force Majeure is relevant to English law contracts only insofar as the concept of an agreed and permitted excuse for failure to perform is written into such contracts. English law commodity trading contracts invariably do so and adopt the term "force majeure" to refer to the permitted excuses.No party will have a right to rely on "force majeure" to excuse his performance of any contractual obligation unless: (1) there is a clause in the contract that clearly covers the situation that has in fact occurred or there is wording that excuses performance where any other unspecified events outside that party's control occur; (2) there is a causative link between the events that have occurred and the party's inability to perform its obligations; and (3) the procedure specified in the clause is followed. If all three requirements are satisfied then the party claiming force majeure is entitled only to do what the clause permits. Often clauses permit suspension of obligations for a period of time but they differ about if and when a party is entitled to cancel the contract or whether performance must be made once the FM ceases.Regarding point (1), clauses frequently refer to "floods" but that may not be enough on its own. For example, mine production may not be directly affected by flood water but may be halted because of lack of transportation available due to the closure of rail systems following the floods. Regarding point (2) some clauses require that the FM events must have "prevented" a party from performing its obligations. Others state that it is enough for the events to "hinder" performance for a party to be excused. Often it is difficult to prove that a particular event has prevented a party from performing because it may be able to perform by means other than those anticipated at the time of contracting. Regarding point (3), where both points (1) and (2) are satisfied a party will then need to ensure that it complies with the procedural requirements of the clause regarding, for example, giving notice of the force majeure event to contractual counterparties. Consistent with the law's approach of holding parties to their contracts, a party may be prevented from relying on a force majeure clause unless it has complied with the requirements of the force majeure clause strictly. For more detail on what a force majeure clause should say and how to comply with it in a "force majeure" situation, see our previous alert number 06-045.Those companies who have contracts with one of the coal producers that has declared force majeure should review their contracts and consider whether the relevant producer is actually excused from performance or not - either because the events do not fall within the clause or because the party invoking force majeure has not complied with the procedural requirements of the clause. A general force majeure declaration is of no legal significance unless it triggers the operation of a specific clause in a contract. It is to be expected that traders that have bought coal from one of the producers that have declared force majeure for onward sale will seek to pass on that declaration to their customers and rely on it. Whether they are entitled to do so and thereby avoid their obligation to deliver to their buyer will, again, depend on the precise wording of the FM clause in their contracts. Where the coal to be delivered is stated to be coal produced from specific mines affected by the floods then sellers may have good grounds for arguing that they are prevented from delivering the coal. Where no origin of the coal is specified then sellers will be in a more difficult position, since the law regards their intended source of supply as irrelevant when assessing whether they are able to deliver coal to a buyer. If coal is available elsewhere (albeit at a much higher price) then a seller may be obliged to buy coal from that alternative source or risk being held in default and liable to pay the difference between the contract price and the relevant market price plus any additional freight costs incurred by a buyer. By way of example, the SCoTA contract incorporates this principle at clause 17.8, which states expressly that a failure by the seller's supplier to deliver coal will not constitute a force majeure event.Where under contracts for the sale of commodities FOB at one of the affected export terminals sellers are unable to deliver within agreed loading windows because of reduced operations at the port or a lack of coal available because of rail disruptions, there are stronger grounds for a seller relying on usual force majeure language. If a seller is unable to buy coal already available at the port or already shipped by another party within the loading window save at an exorbitant price then it may well have grounds for arguing that it has been prevented from delivering coal by the consequences of the floods. The point to remember is that (unless permitted to do so by the relevant contract) a seller cannot safely sit back and expect that he will be excused by the restricted flow of coal to and from the port arising because of the floods. The prudent seller will do all that he can to try to source a cargo to perform the contract or risk being held in default. Parties that have chartered vessels to load coal from one of the affected coal terminals may find themselves facing large demurrage liabilities or cancellations of vessels that do not load their cargoes within agreed laycans. It is less usual for charterparties to include force majeure clauses, though some of the less commonly used forms do. The Gencon form for example provides no means for a charterer to avoid obligations because of disruptions of the like experienced in Australia at present. The COAL-OREVOY form, in contrast, does include a force majeure clause. Of course a clause may be agreed as part of the additional terms that invariably supplement the standard Gencon form. The major suppliers tend to operate on their own standard terms and shipments under a COA may be governed by more apposite wording. As ever, it has to be borne in mind that a force majeure clause will not apply to interrupt the running of laytime or demurrage unless it specifically so provides. In relation to time charterparties charterers should consider whether "Exceptions" clauses provide them with a means of avoiding hire payments but often they will not.ConclusionThe severe flooding in eastern Australia will have a major impact on individuals, businesses and the Australian state for weeks to come. It is to be hoped that the rain will subside and the water levels will dissipate quickly. Given Queensland is such a large exporter of commodities, the effect on contracts in an already high/volatile priced market is likely to be dramatic. Of all commodities it is coal which is likely to be most significantly affected given the volume of the world's coking coal exports that are mined in the affected area of Queensland. Weather-related interruption of supply seems to have been a feature for world commodities in 2010. If one believes what one reads in the press La Niña's effect will continue well into this year. Events in Australia provide a timely reminder for all those with existing contracts to carefully review the force majeure language in their sale/purchase and shipping contracts so they can act appropriately to protect themselves from delay, disruption and loss adverse weather might cause. When preparing new contracts make it a new year's resolution to pay special attention to the inclusion of tailored FM type language in sale/purchase and shipping contracts to minimise exposure to the supply disruption.
Australia has endured one of the wettest spring seasons in its recorded history. Heavy rain in November and December in eastern Australia caused river levels to rise and flood plains to become saturated. This led to widespread localised flooding and to the severe floods reported by the global media over the New Year period.The most severely affected area covers a wide swathe of the middle part of Queensland State. At least seven major rivers in the area are reported to have flooded. At the time of writing the water levels are still high; states of emergency are in effect across many local authorities in the affected area. Water levels are expected to recede in the coming days but not to return to normal levels for weeks to come.Affected commoditiesBeyond the damage to life, property and infrastructure, the severe rain has impacted Australia's important commodities exporting business. Wheat and sugar trades are amongst those affected. Damage to crops and inland transportation problems have lead to fewer stocks being available for export and a consequential rise in market prices. US Wheat futures were reported to be trading at a five-month high this week following concerns about damage to Australian (the world's fourth largest wheat exporter) crops. Australian sugar export forecasts for this year are reported to have been cut by 25%, exacerbating demand pressure and contributing to raw sugar prices reaching a 30 year high. Conversely, dry bulk freight prices have been forced down by the reduction in cargoes available for seaborne carriage. The Baltic Exchange's dry bulk freight index reached a 20 month low this week.The most seriously affected trade is coal. Coal is Australia's biggest export business, accounting for approximately a quarter of Australia's total goods and services exports over recent years. Australia is the largest exporter of coal in the world, exporting 28% of the world total in 2008-2009, with exporting capacity increasing since then.Australia produces both thermal coal (used in the power generating industry) and metallurgical "coking" coal (used in the production of steel). All of Australia's export output of both types of coal is mined in Queensland and New South Wales in eastern Australia, with Queensland producing the greater quantity. The majority of Queensland's coal is coking coal. Its coking coal exports account for approximately two thirds of world trade. The vast majority of Australian coal imported into China, India and Europe is coking coal. Significant quantities are also exported to Japan, Korea and Taiwan. With demand still strong in China and India in particular and disruptions prevalent elsewhere in the major producing areas (Columbia - heavy rains; Russia - severe drought and now severe cold) analysts are busy speculating on the effect the disruptions to the world's coking coal supply will have on prices of coal and steel, which relies on coking coal availability. Prices of both types of coal have already risen to recent highs and many predict further increases into 2011.Our concern in this article is with the legal implications of the supply disruptions for trading contracts. An English law application is assumed but many of the legal principles will be similar under Australian law governed contracts.Force Majeure?The flooding has affected coal exports in three ways: (1) disruption to production due to flooding at producing mines; (2) disruption to the transportation of coal from mines to export terminals; (3) disruption to loading operations at export terminals.It has been widely reported that many of the major coal producers operating in the area have "declared force majeure" in order to protect themselves from defaulting on contractual obligations to supply coal from mines affected by the flooding. The mine operators reported to have done so include BHP Billiton, Rio Tinto, Anglo American, Xstrata, Peabody Energy, Macarthur Coal, Aquila Resources - Vale, Cockatoo Coal and Wesfarmers. In total the mines affected are estimated to produce over a third of Australia's annual production of coal.Coal is transported from the mines primarily by rail. The rail network is among the busiest for freight traffic in the world with trains of between 1 and 2 kilometres in length carrying 8,000-10,000 tonnes of coal operating 24 hours a day. The main rail operator in the area, QR National has been forced to close parts of three of the four major coal transport lines in the area (Blackwater, Moura, Goonyella) due to the floods. Those closures have restricted or stopped completely the supply of coal to export terminals.Four export terminals are reported to have been affected: Abbot Point, Dalrymple Bay, Hay Point and RG Tanna (Gladstone). At the time of writing supplies of thermal coal to the major thermal coal export terminal at Newcastle in New South Wales do not appear to have been severely affected. At the affected terminals shortages of coal have been reported due to the lack of stock arriving on the rail system and stockpiles being depleted. RG Tanna terminal announced that it would operate at 50% capacity last week. As at the time of writing, the terminal is reporting that coal stocks are "extremely low" with no more coal expected on the Moura rail system until the end of next week. 18 vessels are waiting at the port with a further 12 expected over the next week. Dalrymple Bay is said to have been operating at 60-70% of capacity since 1 January, with stocks due to run out this weekend. Of those stocks that are available for export issues may arise in relation to the condition and specification of the "wet" coal.Who can rely on force majeure?Force Majeure is a concept of French law. It is similar to the English law doctrine of frustration of contract (events arising subsequent to the execution of the contract that, without fault of either party, render performance of the contract impossible or radically different from that which was envisaged). Force Majeure is relevant to English law contracts only insofar as the concept of an agreed and permitted excuse for failure to perform is written into such contracts. English law commodity trading contracts invariably do so and adopt the term "force majeure" to refer to the permitted excuses.No party will have a right to rely on "force majeure" to excuse his performance of any contractual obligation unless: (1) there is a clause in the contract that clearly covers the situation that has in fact occurred or there is wording that excuses performance where any other unspecified events outside that party's control occur; (2) there is a causative link between the events that have occurred and the party's inability to perform its obligations; and (3) the procedure specified in the clause is followed. If all three requirements are satisfied then the party claiming force majeure is entitled only to do what the clause permits. Often clauses permit suspension of obligations for a period of time but they differ about if and when a party is entitled to cancel the contract or whether performance must be made once the FM ceases.Regarding point (1), clauses frequently refer to "floods" but that may not be enough on its own. For example, mine production may not be directly affected by flood water but may be halted because of lack of transportation available due to the closure of rail systems following the floods. Regarding point (2) some clauses require that the FM events must have "prevented" a party from performing its obligations. Others state that it is enough for the events to "hinder" performance for a party to be excused. Often it is difficult to prove that a particular event has prevented a party from performing because it may be able to perform by means other than those anticipated at the time of contracting. Regarding point (3), where both points (1) and (2) are satisfied a party will then need to ensure that it complies with the procedural requirements of the clause regarding, for example, giving notice of the force majeure event to contractual counterparties. Consistent with the law's approach of holding parties to their contracts, a party may be prevented from relying on a force majeure clause unless it has complied with the requirements of the force majeure clause strictly. For more detail on what a force majeure clause should say and how to comply with it in a "force majeure" situation, see our previous alert number 06-045.Those companies who have contracts with one of the coal producers that has declared force majeure should review their contracts and consider whether the relevant producer is actually excused from performance or not - either because the events do not fall within the clause or because the party invoking force majeure has not complied with the procedural requirements of the clause. A general force majeure declaration is of no legal significance unless it triggers the operation of a specific clause in a contract. It is to be expected that traders that have bought coal from one of the producers that have declared force majeure for onward sale will seek to pass on that declaration to their customers and rely on it. Whether they are entitled to do so and thereby avoid their obligation to deliver to their buyer will, again, depend on the precise wording of the FM clause in their contracts. Where the coal to be delivered is stated to be coal produced from specific mines affected by the floods then sellers may have good grounds for arguing that they are prevented from delivering the coal. Where no origin of the coal is specified then sellers will be in a more difficult position, since the law regards their intended source of supply as irrelevant when assessing whether they are able to deliver coal to a buyer. If coal is available elsewhere (albeit at a much higher price) then a seller may be obliged to buy coal from that alternative source or risk being held in default and liable to pay the difference between the contract price and the relevant market price plus any additional freight costs incurred by a buyer. By way of example, the SCoTA contract incorporates this principle at clause 17.8, which states expressly that a failure by the seller's supplier to deliver coal will not constitute a force majeure event.Where under contracts for the sale of commodities FOB at one of the affected export terminals sellers are unable to deliver within agreed loading windows because of reduced operations at the port or a lack of coal available because of rail disruptions, there are stronger grounds for a seller relying on usual force majeure language. If a seller is unable to buy coal already available at the port or already shipped by another party within the loading window save at an exorbitant price then it may well have grounds for arguing that it has been prevented from delivering coal by the consequences of the floods. The point to remember is that (unless permitted to do so by the relevant contract) a seller cannot safely sit back and expect that he will be excused by the restricted flow of coal to and from the port arising because of the floods. The prudent seller will do all that he can to try to source a cargo to perform the contract or risk being held in default. Parties that have chartered vessels to load coal from one of the affected coal terminals may find themselves facing large demurrage liabilities or cancellations of vessels that do not load their cargoes within agreed laycans. It is less usual for charterparties to include force majeure clauses, though some of the less commonly used forms do. The Gencon form for example provides no means for a charterer to avoid obligations because of disruptions of the like experienced in Australia at present. The COAL-OREVOY form, in contrast, does include a force majeure clause. Of course a clause may be agreed as part of the additional terms that invariably supplement the standard Gencon form. The major suppliers tend to operate on their own standard terms and shipments under a COA may be governed by more apposite wording. As ever, it has to be borne in mind that a force majeure clause will not apply to interrupt the running of laytime or demurrage unless it specifically so provides. In relation to time charterparties charterers should consider whether "Exceptions" clauses provide them with a means of avoiding hire payments but often they will not.ConclusionThe severe flooding in eastern Australia will have a major impact on individuals, businesses and the Australian state for weeks to come. It is to be hoped that the rain will subside and the water levels will dissipate quickly. Given Queensland is such a large exporter of commodities, the effect on contracts in an already high/volatile priced market is likely to be dramatic. Of all commodities it is coal which is likely to be most significantly affected given the volume of the world's coking coal exports that are mined in the affected area of Queensland. Weather-related interruption of supply seems to have been a feature for world commodities in 2010. If one believes what one reads in the press La Niña's effect will continue well into this year. Events in Australia provide a timely reminder for all those with existing contracts to carefully review the force majeure language in their sale/purchase and shipping contracts so they can act appropriately to protect themselves from delay, disruption and loss adverse weather might cause. When preparing new contracts make it a new year's resolution to pay special attention to the inclusion of tailored FM type language in sale/purchase and shipping contracts to minimise exposure to the supply disruption.
Caltex Australia Shares Fall After Floods in Queensland Shut Oil Refinery
By Ben Sharples - Jan 12, 2011
Caltex Australia Ltd., the nation’s biggest oil refinery, dropped the most in more than six months after heavy rains forced the shutdown of a refinery that supplies about a third of Queensland state’s fuel needs.
Caltex Australia, half-owned by Chevron Corp., fell 5.7 percent, the most since June 25, to A$14.14 at the 4:10 p.m. close in Sydney. That compares with a 0.3 percent increase in the benchmark S&P/ASX 200 Index.
Flooding caused a “steam outage” at the Lytton refinery on Jan. 5, prompting an unscheduled shutdown, the Sydney-based company said in a statement. Partial output will resume tomorrow and progressively increase during the next 10 days, Caltex Australia said. Full operations are dependent on the Port of Brisbane, which has been closed, returning to normal, it said.
Lytton, the smaller of Caltex’s two refineries, is about 20 kilometers (12 miles) east of Brisbane and can process 109,000 barrels of crude a day. Australia’s third-largest city faces its worst deluge since 1893 and more than 75 percent of Queensland, an area bigger than Texas and California combined, has been declared a disaster zone.
The shutdown is expected to cost between A$5 million (A$4.9 million) and A$10 million, in 2011, the fuel producer said. Caltex Australia is doing maintenance at Lytton during the shutdown that had been scheduled for later in the year. Its biggest refinery is at Kurnell, south of Sydney.
‘Severe’ Currents, Debris
Across the river from Lytton, BP Plc’s Bulwer Island refinery is operating normally, Jamie Jardine, an Australian- based spokesman, said by phone. The refinery has a capacity of 88,000 barrels per day.
The Port of Brisbane, Australia’s third-busiest container harbor, is closed to maritime traffic and all ships have been removed because of severe currents and “huge amounts” of debris including boats and pontoons floating downstream, the port said on its website today.
The facility is likely to lose power because of the flooding of electrical substations, it said. Road access is open and is expected to remain passable during the flood. The harbor lies on the southern side of the Brisbane River, 24 kilometers from the city’s central business district.
Heavy rain this week caused a landslide near the city of Toowoomba, cutting part of the West Moreton rail network that carries coal to the port, Mark Hairsine, a spokesman for track manager QR National Ltd. said yesterday.
Queensland in November agreed to sell the Port of Brisbane to a group including Global Infrastructure Partners and Abu Dhabi Investment Authority, raising A$2.1 billion in cash to replace income lost to the financial crisis.
News via Bloomberg, Reporter Ben Sharples in Melbourne at bsharples@bloomberg.net
Thursday, January 6, 2011
Coking Coal Contract Price May Rise 33% on Australian Floods
Courtesy news via Bloomberg by Ben Sharples - Jan 5, 2011 6:30 PM GMT+0530
Steelmakers in Asia may be forced to pay as much as 33 percent more for hard coking coal after the worst floods in 50 years in Australia’s Queensland state disrupted output from the world’s biggest shipper of the fuel.
Prices may increase to $270 a metric ton for three-month contracts starting April 1 as the floods threaten to take as much as 10 million tons of metallurgical coal out of the market, Colin Hamilton, a London-based analyst at Macquarie Group Ltd., said in an e-mailed response to questions. Daiwa Capital Markets analyst David Brennan said prices may jump to $300 a ton. Mills agreed to pay $225 a ton for the three months starting Jan. 1, Bank of America Merrill Lynch analysts wrote in a report last month.
Rain in Queensland, where waters have inundated an area the size of France and Germany, has prompted BHP Billiton Ltd. and Rio Tinto Group to declare force majeure, a legal clause that allows mines to miss deliveries. About 37 percent of the world’s traded coking coal is affected, according to Macquarie. Floods in Queensland in 2008 left steel producers, including Japan’s Nippon Steel Corp. and JFE Holdings Inc., with a threefold increase in annual contract prices to about $300 a ton.
“Queensland accounts for the majority of the premium hard coking coal supply on a global seaborne basis,” Alex Tonks, a commodity strategist at Bank of America Merrill Lynch in Sydney, said by telephone. “A lot of operations have been impacted. It certainly looks pretty bad at this stage.”
Flooding is also affecting thermal coal, used by power stations, driving the price of supplies at the port of Newcastle in Australia’s New South Wales, the benchmark for Asia, to the most in 27 months. Prices jumped 3 percent to $126.10 a ton in the week ended Dec. 31, the most since Oct. 2008, according to IHS McCloskey, a Petersfield, U.K.-based provider of coal data.
Monthly Contracts
Coking coal suppliers traditionally hold annual talks with steelmakers to fix benchmark contracts for the 12 months from April 1, the start of the Japanese financial year. BHP has urged the industry to move to short-term deals to make prices more responsive to market changes. It agreed with JFE Holdings to the first three-month accord in March last year.
Steelmakers may agree to monthly pricing for coking coal, as proposed by BHP, in a “price spike environment” rather than locking in $300 a ton for a whole quarter, Macquarie said in an e-mailed research note Jan. 4.
“We’re moving away from that quarterly contract pricing,” Daiwa’s Brennan said from Melbourne. “I can see that BHP wants to go to monthly. When I say $300 a ton that would be for one month in April for example, but not for the three months.”
Port Stockpiles
Coal stockpiles at Gladstone harbor in Queensland are “very low” after flooding shut a rail network, Craig Walker, acting chief executive officer of Gladstone Ports Corp., said yesterday. Eighteen ships are waiting to load and 12 more are expected at the harbor in the next 10 days, he said.
“The flooding will provide further upside to international coal prices and a floor to Chinese prices,” Helen Lau, an analyst at UOB-Kay Hian Ltd., said by telephone from Hong Kong. “It’ll easily take six to eight weeks, in a blue-sky scenario, before Australian supplies return to normal. Maybe it’ll take three to four months.”
Australia shipped 259 million tons of coal for steel and power in 2009, the World Coal Association said on its website.
Global steel demand is forecast to reach a record 1.34 billion tons in 2011, the World Steel Association said in October. The biggest producers are in China, which account for about 45 percent of the world’s production.
‘Sufficient Supplies’
Tata Steel Ltd. said it increased purchases in December in preparation for the adverse weather. The Mumbai-based company, India’s biggest producer of steel, ensured it had sufficient supplies, Managing Director H.M. Nerurkar said Jan. 4 by phone.
JSW Steel Ltd., India’s third-biggest producer, also imported a higher quantity of coking coal in December in anticipation of the rains in Australia, from where it gets the bulk of its supplies, Chief Executive Officer Vinod Nowal said in a Jan. 4 interview from Mumbai.
China Steel Corp.’s costs for coal increased by $10 million because of the flooding, Executive Vice President Chung Le-min said Jan. 4 from Kaohsiung, Taiwan. Taiwan’s biggest maker of the metal bought spot coal from Russia and Canada because some Australian suppliers were unable to make deliveries, he said.
About 98 million tons of capacity to produce steelmaking coal is under force majeure, equivalent to 73 percent of Queensland exports, Macquarie said. The floods have resulted in 10 deaths and the displacement of about 200,000 people in Queensland, according to the state police.
Australia is the largest producer of coal used in steelmaking, contributing more than 40 percent of the global seaborne trade, according to Deutsche Bank AG. The country is the second-largest exporter of the commodity after Indonesia.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
Wednesday, January 5, 2011
US coal miners rally, eye exports on Australia floods,
Courtsey news via Reuters by Steve James and Bruce NicholsMon Jan 3, 2011.
NEW YORK/HOUSTON, Jan 3 (Reuters) - U.S. coal miner shares rallied on Monday as massive floods in Australia disrupted a big chunk of the world's metallurgical coal supply, driving up prices and causing Asian importers to hunt for alternatives.
Floods in northeast Australia have brought most mining operations to a halt in Queensland, which produces the bulk of Australia's steelmaking coal. Australia is the largest exporter of the grade, exporting about 125 million tonnes, with the United States a distant second at 33 million tonnes in 2009.
Steelmakers globally are feeling the effect and are bidding up prices for U.S. exports of high-grade coal that is a key ingredient for producing steel. U.S. metallurgical coal is among the world's best, analysts said.
"Japanese, Korean and Taiwanese mills have started inquiring about near term U.S. coal at market prices higher than the pattern deal for the first quarter," said coal trader Frank Kolojeski at Export Commodities International Inc.
BHP (BHP.AX) and Japanese steelmakers agreed on $225 per metric tonne ($205 per U.S. short ton) for the first quarter of 2011 but analysts say $300 and above, last reached in 2008 when Australia suffered flood problems, is not out of the question.
All U.S. coal company stocks rose, with Consol Energy (CNX.N) leading the pack with a jump of 5 percent.
Inside Coal industry newsletter said met coal prices in Australia had risen past $240 a metric tonne before Christmas, and analysts said the price likely is higher than that now.
"Spot coal likely is trading at a significant premium," said Brian Gamble, coal analyst at Simmons & Co in Houston.
Lower-grade thermal coal, used to make steam in power plants, also is rising but the impact on utilities has beens less pronounced, analysts said.
U.S. coking coal exports have increased this year from 35.4 million in the 12 months through January 2010 to 49.8 million tons in the 12 months through October 2010, but infrastructure constraints could limit further immediate sales to the steel mills in Japan, South Korea and China.
One factor that could boost prices for U.S. exports is port capacity, which at about 130 million short tons is very small compared to the size of the 1.1-billion-tons-per year U.S. coal industry and is nearly full already, analysts said.
But the scramble for alternatives could be even more intense now that China is important about 10 times more than it was in 2008, said Kolojeski.
"The volatility may well be greater now," Kolojeski said.
The effect on steel prices could be muted by the fact that much of the steel used, particularly in the United States, is recycled and does not require coal to manufacture, said analyst Michelle Applebaum of Steel Market Intelligence in Chicago.
In afternoon trading on the New York Stock Exchange, Consol Energy (CNX.N) stock was up 5.4 percent at $51.39 and Alpha Natural Resources was up 3.4 percent higher at $62.04. Arch Coal (ACI.N) and Massey Energy (MEE.N) were up over 2 percent and Peabody Energy (BTU.N) rose 1.4 percent.
NEW YORK/HOUSTON, Jan 3 (Reuters) - U.S. coal miner shares rallied on Monday as massive floods in Australia disrupted a big chunk of the world's metallurgical coal supply, driving up prices and causing Asian importers to hunt for alternatives.
Floods in northeast Australia have brought most mining operations to a halt in Queensland, which produces the bulk of Australia's steelmaking coal. Australia is the largest exporter of the grade, exporting about 125 million tonnes, with the United States a distant second at 33 million tonnes in 2009.
Steelmakers globally are feeling the effect and are bidding up prices for U.S. exports of high-grade coal that is a key ingredient for producing steel. U.S. metallurgical coal is among the world's best, analysts said.
"Japanese, Korean and Taiwanese mills have started inquiring about near term U.S. coal at market prices higher than the pattern deal for the first quarter," said coal trader Frank Kolojeski at Export Commodities International Inc.
BHP (BHP.AX) and Japanese steelmakers agreed on $225 per metric tonne ($205 per U.S. short ton) for the first quarter of 2011 but analysts say $300 and above, last reached in 2008 when Australia suffered flood problems, is not out of the question.
All U.S. coal company stocks rose, with Consol Energy (CNX.N) leading the pack with a jump of 5 percent.
Inside Coal industry newsletter said met coal prices in Australia had risen past $240 a metric tonne before Christmas, and analysts said the price likely is higher than that now.
"Spot coal likely is trading at a significant premium," said Brian Gamble, coal analyst at Simmons & Co in Houston.
Lower-grade thermal coal, used to make steam in power plants, also is rising but the impact on utilities has beens less pronounced, analysts said.
U.S. coking coal exports have increased this year from 35.4 million in the 12 months through January 2010 to 49.8 million tons in the 12 months through October 2010, but infrastructure constraints could limit further immediate sales to the steel mills in Japan, South Korea and China.
One factor that could boost prices for U.S. exports is port capacity, which at about 130 million short tons is very small compared to the size of the 1.1-billion-tons-per year U.S. coal industry and is nearly full already, analysts said.
But the scramble for alternatives could be even more intense now that China is important about 10 times more than it was in 2008, said Kolojeski.
"The volatility may well be greater now," Kolojeski said.
The effect on steel prices could be muted by the fact that much of the steel used, particularly in the United States, is recycled and does not require coal to manufacture, said analyst Michelle Applebaum of Steel Market Intelligence in Chicago.
In afternoon trading on the New York Stock Exchange, Consol Energy (CNX.N) stock was up 5.4 percent at $51.39 and Alpha Natural Resources was up 3.4 percent higher at $62.04. Arch Coal (ACI.N) and Massey Energy (MEE.N) were up over 2 percent and Peabody Energy (BTU.N) rose 1.4 percent.
Analysis: Steel mills face higher costs after Australia floods, Spot prices for coking coal are at around $250 a tonne
News via Reauters by James Regan and Rebekah Kebede, SYDNEY, Tue Jan 4, 2011.
(Reuters) - Spot coking coal prices have risen around 10 percent in a month and look set to move sharply higher as Asia's steel mills scour the globe for new suppliers to cover production lost to Australian floods.More than two months of torrential rains in Australia's Queensland state, the world's largest exporter of coal for steel-making, have left collieries underwater, rail lines inoperable and coal ports running at a trickle -- if at all.
Spot prices for coking coal are at around $250 a tonne, according to coal analysts and traders, more than 10 percent over the industry benchmark $225 a tonne free on board Australian ports negotiated between BHP Billiton and Japanese steelmakers for the first quarter of 2011.Pressure to find coal elsewhere is now expected to lift spot prices close to $300 a tonne in the next few weeks, a level last seen when Australian collieries flooded in 2008 and a boon to non-Australian producers like Indonesia's PT Borneo Lumbung Energi and U.S.-based Consol Energy.is off line right now," said Patersons Securities sector analyst Andrew Harrington in Sydney.Australia's 159 million tonnes of coking coal exports in 2010 accounted for nearly two thirds of global shipments, according to preliminary government figures.Flood waters are finally starting to recede in the key Queensland coal producing Bowen Basin, but remained high, said the Australian Bureau of Meteorology. Declarations of force majeure by coal miners were yet to be lifted.Wesfarmers Ltd has already trimmed 2010/11 production guidance to between 5.8 million and 6.2 million tonnes from 6.0-6.5 million."Last time around we had $100 (a tonne) coking coal go to $300 and this looks to be a lot worse than last time," Harrington said."The rains have come much earlier and the flooding is much bigger in scope, so the likelihood is that the disruption is going to be longer," Harrington said.
The jump in spot prices is expected to lead to higher second quarter contract prices, which are based on average daily spot prices over the previous three months."The market was already tight, so there's only one way things can go," said Grant Craighead, manager of Stock Resource in Sydney. "The price will get squeezed upwards and producers will scramble for coking coal wherever they can."Steelmakers globally are bidding up prices for U.S. exports of high-grade coal. Coking coal is needed to produce steel from conventional blast furnaces. U.S. metallurgical coal is among the world's best, analysts said.Taiwan-based China Steel's executive vice president, Lo Ming Chung, said about 80 percent of his company's coking coal came from Australia, but it had now turned to the spot market since it could not source coal from Australia.
China Steel's costs have risen some $10 million since the Australian floods, but it has made up all the lost supply from the spot market and is not thinking of cutting production, he added.
In China, Australia's supply disruptions have not yet spilled over to the domestic market, with steel mills holding comfortable inventory levels after having replenished supplies in November and December, local raw materials traders said.
Beijing's energy saving campaign over the past three months, which forced many mills to scale back output or shut down altogether, has inadvertently conserved supplies as well.
China, the world's top steel maker, produced around 450 million tonnes of coking coal in 2010, data from Merrill Lynch shows, and it also imported around 40 million tonnes.
If coking coal prices were to increase by 20 percent, global steelmakers' production costs would rise by over $30 a tonne, according to research by Steel Market intelligence.
Brian Gamble, a coal analyst with Simmons & Co, said the floods had created a situation where consumers of metallurgical coal were having to reevaluate their needs for 2011.
"And it's creating pressure frankly on the whole system," Gamble said in a client note.
But a Japanese steel mill executive said that coking coal supply disruptions were not unusual in Australia at this time of year, and that mills typically stocked more than a month's worth of coking coal inventory to ride out any shortage.
"The last time when Australians declared force majeure in 2008, some Japanese mills turned to Canadian coal and slightly cut production," the executive said."Spot prices spiked at that time, and there were worries that Japanese mills will not be able to buy, but eventually the imports from other sources turned out to be small," he said.
(Additional reporting by Fayen Wong in SHANGHAI, Yuko Inoue in TOKYO, Lin Miaojung in TAIPEI, Neil Chatterjee in JAKARTA, and Tom Miles in BEIJING; Editing by Michael Urquhart)
(Reuters) - Spot coking coal prices have risen around 10 percent in a month and look set to move sharply higher as Asia's steel mills scour the globe for new suppliers to cover production lost to Australian floods.More than two months of torrential rains in Australia's Queensland state, the world's largest exporter of coal for steel-making, have left collieries underwater, rail lines inoperable and coal ports running at a trickle -- if at all.
Spot prices for coking coal are at around $250 a tonne, according to coal analysts and traders, more than 10 percent over the industry benchmark $225 a tonne free on board Australian ports negotiated between BHP Billiton and Japanese steelmakers for the first quarter of 2011.Pressure to find coal elsewhere is now expected to lift spot prices close to $300 a tonne in the next few weeks, a level last seen when Australian collieries flooded in 2008 and a boon to non-Australian producers like Indonesia's PT Borneo Lumbung Energi and U.S.-based Consol Energy.is off line right now," said Patersons Securities sector analyst Andrew Harrington in Sydney.Australia's 159 million tonnes of coking coal exports in 2010 accounted for nearly two thirds of global shipments, according to preliminary government figures.Flood waters are finally starting to recede in the key Queensland coal producing Bowen Basin, but remained high, said the Australian Bureau of Meteorology. Declarations of force majeure by coal miners were yet to be lifted.Wesfarmers Ltd has already trimmed 2010/11 production guidance to between 5.8 million and 6.2 million tonnes from 6.0-6.5 million."Last time around we had $100 (a tonne) coking coal go to $300 and this looks to be a lot worse than last time," Harrington said."The rains have come much earlier and the flooding is much bigger in scope, so the likelihood is that the disruption is going to be longer," Harrington said.
The jump in spot prices is expected to lead to higher second quarter contract prices, which are based on average daily spot prices over the previous three months."The market was already tight, so there's only one way things can go," said Grant Craighead, manager of Stock Resource in Sydney. "The price will get squeezed upwards and producers will scramble for coking coal wherever they can."Steelmakers globally are bidding up prices for U.S. exports of high-grade coal. Coking coal is needed to produce steel from conventional blast furnaces. U.S. metallurgical coal is among the world's best, analysts said.Taiwan-based China Steel's executive vice president, Lo Ming Chung, said about 80 percent of his company's coking coal came from Australia, but it had now turned to the spot market since it could not source coal from Australia.
China Steel's costs have risen some $10 million since the Australian floods, but it has made up all the lost supply from the spot market and is not thinking of cutting production, he added.
In China, Australia's supply disruptions have not yet spilled over to the domestic market, with steel mills holding comfortable inventory levels after having replenished supplies in November and December, local raw materials traders said.
Beijing's energy saving campaign over the past three months, which forced many mills to scale back output or shut down altogether, has inadvertently conserved supplies as well.
China, the world's top steel maker, produced around 450 million tonnes of coking coal in 2010, data from Merrill Lynch shows, and it also imported around 40 million tonnes.
If coking coal prices were to increase by 20 percent, global steelmakers' production costs would rise by over $30 a tonne, according to research by Steel Market intelligence.
Brian Gamble, a coal analyst with Simmons & Co, said the floods had created a situation where consumers of metallurgical coal were having to reevaluate their needs for 2011.
"And it's creating pressure frankly on the whole system," Gamble said in a client note.
But a Japanese steel mill executive said that coking coal supply disruptions were not unusual in Australia at this time of year, and that mills typically stocked more than a month's worth of coking coal inventory to ride out any shortage.
"The last time when Australians declared force majeure in 2008, some Japanese mills turned to Canadian coal and slightly cut production," the executive said."Spot prices spiked at that time, and there were worries that Japanese mills will not be able to buy, but eventually the imports from other sources turned out to be small," he said.
(Additional reporting by Fayen Wong in SHANGHAI, Yuko Inoue in TOKYO, Lin Miaojung in TAIPEI, Neil Chatterjee in JAKARTA, and Tom Miles in BEIJING; Editing by Michael Urquhart)
Tuesday, January 4, 2011
Australian Floods Affect 37% Of Global Coal, Macquarie Says
Rains and floods in Australia's Queensland state are disrupting tellurian reserve of steelmaking coal, with 37 percent of the world's traded prolongation affected by force majeure, according to Macquarie Group Ltd.
Force majeure, a authorised tenure which allows producers to miss contracted shipments since of resources over their control, is inspiring 98 million metric tons of metallurgical coal prolongation capacity, homogeneous to 73 percent of exports from Queensland, Macquarie estimated in a note to clients today.
BHP Billiton Ltd., Rio Tinto Group, Xstrata Plc, Peabody Energy Corp. and Anglo American Plc are between producers affected by the sleet in Australia, the world's greatest exporter of coal. The sleet comes after the nation's wettest September-to-November on record, with showers and storms foresee to go on across Queensland until at slightest Jan. 6, the Bureau of Meteorology said on its website.
Mining companies in Queensland's Bowen Basin and surrounds operate 50 mines, according to Queensland's Department of Employment, Economic Development and Innovation.
Contributor of this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
Force majeure, a authorised tenure which allows producers to miss contracted shipments since of resources over their control, is inspiring 98 million metric tons of metallurgical coal prolongation capacity, homogeneous to 73 percent of exports from Queensland, Macquarie estimated in a note to clients today.
BHP Billiton Ltd., Rio Tinto Group, Xstrata Plc, Peabody Energy Corp. and Anglo American Plc are between producers affected by the sleet in Australia, the world's greatest exporter of coal. The sleet comes after the nation's wettest September-to-November on record, with showers and storms foresee to go on across Queensland until at slightest Jan. 6, the Bureau of Meteorology said on its website.
Mining companies in Queensland's Bowen Basin and surrounds operate 50 mines, according to Queensland's Department of Employment, Economic Development and Innovation.
Contributor of this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net
Australian floods: cost to industry
How the floods will impact on coal mining and agriculture in Australia.Australia is the world's largest coal exporter and the state of Queensland is the main supplier of the valuable commodity.
The floods have washed away key tracks linking mines to ports, shutting down several mines and costing the industry an estimated $1 billion in production so far.
With 75 per cent of mines in the state affected by the floods, coal prices have started to rise.
The price of Queensland coking coal has jumped to $253 (£164) per tonne from $225 in the past three weeks and are expected to rise further.
The floods have washed away key tracks linking mines to ports, shutting down several mines and costing the industry an estimated $1 billion in production so far.
With 75 per cent of mines in the state affected by the floods, coal prices have started to rise.
The price of Queensland coking coal has jumped to $253 (£164) per tonne from $225 in the past three weeks and are expected to rise further.
Saul Eslake, program director of the Grattan Institute, said the economic impact for the state would be devastating.
"It will hit in a number of ways, although it's perhaps too early to put a precise figure on the economic impact.
"The biggest short term impact in terms of dollars is the disruption to coal exports, and some figures put that at $400 million dollars a week."
Agriculture
Thousands of properties have been flooded and livestock left stranded on islands in the vast inland muddy sea.
Queensland also accounts for nearly all of the country's sugar production and export, but this year will need to buy more raw sugar from rivals Brazil and Thailand to meet sales commitments because of drenched cane fields.
The industry group Cane growers estimated up to 18 per cent of the 2010 cane harvest has been abandoned and early plantings for 2011's crop were under water.
Australia is also the world's fourth largest wheat exporter. Crop analysts and farmers said up to 50 per cent of the 2010-11 crop would be downgraded.
Widespread damage to crops in Queensland is also likely to push up fruit, vegetable and dairy prices by as much as 50 per cent due to the crop losses that are being experienced.
Tropical fruits are stranded in the wet.
About $4 million worth of pineapples are stranded in the Rockhampton area after floodwaters cut road access to the south of the city.
Around $500,000 worth of lychees and a similar amount in mangoes are also awaiting urgent distribution.
"It will hit in a number of ways, although it's perhaps too early to put a precise figure on the economic impact.
"The biggest short term impact in terms of dollars is the disruption to coal exports, and some figures put that at $400 million dollars a week."
Agriculture
Thousands of properties have been flooded and livestock left stranded on islands in the vast inland muddy sea.
Queensland also accounts for nearly all of the country's sugar production and export, but this year will need to buy more raw sugar from rivals Brazil and Thailand to meet sales commitments because of drenched cane fields.
The industry group Cane growers estimated up to 18 per cent of the 2010 cane harvest has been abandoned and early plantings for 2011's crop were under water.
Australia is also the world's fourth largest wheat exporter. Crop analysts and farmers said up to 50 per cent of the 2010-11 crop would be downgraded.
Widespread damage to crops in Queensland is also likely to push up fruit, vegetable and dairy prices by as much as 50 per cent due to the crop losses that are being experienced.
Tropical fruits are stranded in the wet.
About $4 million worth of pineapples are stranded in the Rockhampton area after floodwaters cut road access to the south of the city.
Around $500,000 worth of lychees and a similar amount in mangoes are also awaiting urgent distribution.
Courtsey article by Bonnie Malkin 12:41PM GMT 04 Jan 2011. Telegraph
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