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Australian Floods Push Coal Price to Two-Year High, Ravage Crops
2011-01-11 05:43:05.131 GMT
By Ben Sharples and Wendy Pugh
Jan. 11 (Bloomberg) -- Australian thermal coal prices rose
to the highest since September 2008 as Queensland's worst floods
in 50 years disrupted mines, cut transport and damaged crops.
The price of power station coal at the port of Newcastle in
New South Wales, the benchmark for Asia, jumped 4.5 percent to
$131.80 a metric ton in the week ended Jan. 7, according to IHS
McCloskey. Australian Cotton Shippers Association Chairman
Arthur Spellson said today production losses may be about
300,000 bales. Rabobank Groep NV has cut its output forecast for
the cotton crop by 8 percent because of the floods.
The rains have inundated an area the size of France and
Germany, shutting mines, cutting rail lines and destroying
crops, with the latest downpour leaving nine people dead and
more than 60 missing. Gladstone Ports Corp. Chief Executive
Officer Leo Zussino said today coal stockpiles at the export
harbor were "extremely low."
"There is going to be some coal scarcity that's going to
impact the global market for a little while," Michael Roche,
chief executive officer of the Queensland Resources Council,
said in a telephone interview. "You've got to expect that
clearing water from flooded pits will go on into next month.
Getting back into full production will be a mine-by-mine
proposition."
The flooded region is losing A$480 million ($473 million) a
week in coal exports, Mark Pervan, head of commodity research at
Australia & New Zealand Banking Group Ltd. in Melbourne, said in
a note on Jan 7. BHP Billiton Ltd., Wesfarmers Ltd. and Rio
Tinto Group are among companies to declare force majeure, a
legal clause that allows mines to miss deliveries.
Cotton and Sugar
The deluge may have cut Queensland cotton production by
500,000 bales, Rabobank estimated in an e-mailed report
yesterday. The bank cut its forecast for national production to
3.95 million bales, each weighing 500 pounds. The cotton crop
will still be at a record because output in New South Wales will
help offset the flooding losses.
"The ability of cotton to recover is going to be
determined by whether it gets a lot of good, hot, sunny weather
from now, and it's obviously not getting that at the moment,"
the Cotton Shippers Association's Spellson said by telephone.
Rabobank cut its raw sugar output forecast for 2011-2012 by
10 percent to 3.8 million metric tons. Maryborough Sugar Factory
Ltd. said today there has been "no material impact" to the
company's infrastructure or crop estimates.
Queensland may have lost 200,000 tons of wheat and barley
output since the end of November as well as 300,000 tons in
sorghum production, Rabobank said. Australia is the fourth
largest cotton exporter and the third-biggest shipper of sugar.
'Significant Landslide'
Rains caused a landslide near the city of Toowoomba,
cutting part of the rail network that carries freight and
passengers and serves Peabody Energy Corp. and New Hope Corp.
coal mines, QR National Spokesman Mark Hairsine said by
telephone today. "The early advice is that it's a significant
landslide."
Australia's export coking coal prices jumped 6.9 percent to
$265 a metric ton on average last week from $248, according IHS
McCloskey, a Petersfield, U.K.-based provider of coal data. The
country is the largest shipper of coal used in steelmaking and
trails only Indonesia in exports of the thermal variety.
Queensland exports about 50 million tons of thermal coal a
year, according to Macquarie Group Ltd. Including coal used by
steelmakers, Australia shipped 259 million tons in 2009, the
World Coal Association website shows.
New Hope said today production had been suspended at its
New Acland and New Oakleigh coal mines because of "substantial
rainfall" in the past 48 hours. Wesfarmers said severe flooding
is "significantly impacting" output from its Curragh
operation.
Beef Disruptions
Gloucester Coal Ltd. said today that its open cut mining
operations, 100 kilometers north of Newcastle in New South
Wales, haven't been materially affected.
Swift Australia, the nation's largest beef processor, said
its operations at Ipswich and Toowoomba had been disrupted.
"Toowoomba is down for two days," Director John Berry
said by phone today. "Ipswich will be affected for a long
period of time because of supply issues." Swift Australia is a
unit of Sao Paulo-based JBS SA.
GrainCorp Ltd., eastern Australia's largest grain handler,
said yesterday its Fisherman Islands port elevator near Brisbane
was receiving grain by road, while rail operations were still
restricted after flooding.
Repairing the damage may cost more than A$5 billion ($4.94
billion), Queensland Premier Anna Bligh has said.
For Related News and Information:
Top Commodity Stories: CTOP <GO>
--With assistance by Phoebe Sedgman in Wellington. Editors: John
Viljoen, Peter Langan
To contact the reporter on this story:
Ben Sharples in Melbourne at +61-3-9228-8732 or
bsharples@bloomberg.net;
Rebecca Keenan in Melbourne at +61-3-9228-8721 or
rkeenan5@bloomberg.net
To contact the editor responsible for this story:
Jane Lee in Kuala Lumpur at +603-2302-7855 or
jalee@bloomberg.net
