Posted on 25 Mar 2021
Massive flooding caused by days of incessant rains across south-eastern Australia’s New South Wales has adversely affected coal mining, transportation and sales across the state, prompting Chinese market sources to warn that global thermal coal prices may climb as a result.
Since last week, large swathes of New South Wales have been swamped by floods, with more than 18,000 homeowners already evacuated from low-lying regions and another 15,000 set to leave their homes on Tuesday, according to media reports. On March 23, Australia’s Bureau of Meteorology released further warnings about ferocious winds, heavy rainfall, abnormally high tides and damaging surf in coastal areas of the state including Newcastle, Sydney and Wollongong.
“The floods in New South Wales have already affected some open-cut coal operations in the state,” said an industry source close to a large-sized miner in Australia.
In a notice to investors issued on Tuesday, NSW-based Whitehaven coal announced it was reducing its managed coal sales guidance for FY2021 (spanning July 2020-June 2021) from the previous 19-20 million tonnes to 18.5-19 million tonnes, citing the flooding and weather-related port restrictions.
“While Whitehaven does not expect flooding at any of its operations, there is an elevated possibility of temporary inundation of local roads which could disrupt workforce movements and product haulage,” the company remarked in its announcement.
“Significant flooding has been seen elsewhere, with the Australian Rail Track Corporation (ARTC) advising that the Hunter Valley rail network is experiencing interruptions due to localised flooding which is expected to subside later this week,” Whitehaven noted.
As the operator for Hunter Valley Network, a core coal transportation line in NSW, ARTC had announced on March 19 that it had ceased operations on the network between Newcastle and Maitland due to flooding. No subsequent statement has been released by the Corporation mentioning when operations might resume, Mysteel Global notes.
Last Friday too, Newcastle Coal Infrastructure Group announced a two-week rectification of its operative ship-loader, which forced Whitehaven to redirect ships across to Port Waratah Coal Services, also in the Port of Newcastle. Port of Newcastle is one of the country’s largest conduits for thermal and metallurgical coal exports.
The flooding in New South Wales has already slowed Australian coal shipments to Japan, a source with a Japanese trading house told Mysteel Global, though details remain unclear.
China’s coal market has not been directly impacted due to the country’s restrictions on Australian coal imports since last October. “China has not received coal from Newcastle for months, and the situation may continue for the rest of this year,” anticipated a Shanghai-based industrial source.
However, the supply disruption of Australian high-calorie thermal coal may force traditional buyers of this coal to seek substitute varieties from other origins, which may increase coal import costs for China’s traders and end-users, another Shanghai-based analyst commented.
“The FOB price for 6,000 kcal/kg Australian thermal coal has jumped to above $100/tonne,” he observed. “Under these circumstances, prices of some high-calorie Indonesian coal products may get a boost.”
Source:Mysteel Global
