Australian thermal coal hits 4-mth high as floods restrict exports
Quantum Commodity Intelligence - Benchmark Australian thermal coal prices maintained the month-long rally Monday, nearing record highs, as flooding in New South Wales continued to curtail exports from the key coal hub of Newcastle severely.
FOB Australia Aug22 thermal coal futures trading on ICE closed Monday at $419/mt, basis Newcastle, $3.50/mt higher on the day and up by more than $100/mt from the mid-June price of around $315/mt.
An all-time high of $440/mt was reached on 3 March as Russia launched its full-scale invasion of Ukraine. At the start of the year, prices for the Aug22 contract were around $120/mt.
Australia's Financial Review business newspaper reported that rail haulage companies had suspended coal export services in NSW's Hunter Valley after floods closed rail links from mines to ports.
The Australian Rail Track Corporation (ARTC) closed the Hunter Valley rail network, which connects about 40 coal mines to the Port of Newcastle, on Tuesday last week due to floods, said the report.
Fellow rail operator Pacific National also said it had experienced significant disruptions to its Hunter Valley coal haulage operations since last Tuesday, including a period of about 48 hours when access to the Port of Newcastle on Kooragang Island was closed due to severe flooding.
"Pacific National has lost approximately 140 coal haulage services, the majority being export services," a company spokesperson told Financial Review. This represents about 1.77 million tonnes of coal.
European coal prices have also rallied more than $100/mt over the past month, with the ICE-listed API2 Rotterdam futures contract for Aug22 trading around $380/mt Monday.
Revenue
Last week, the Australian Department of Industry, Science, Energy and Resources said unprecedented income from LNG and coal would more than offset waning earnings from top export iron ore.
The country said it would ship AUD 419 billion ($284 billion) of metals and energy commodities in the year to 30 June 2023, 3.5% more than in the prior period and 13% higher than estimated in its previous quarterly report.
Global coal investment is expected to rise by almost 10% this year to $116 billion, according to the IEA's World Energy Investment report published last month.
This will be the second successive double-digit annual growth of funding in the dirtiest form of energy on the back of increased energy security issues.
Last week, Asia LNG prices soared above $40/mmBtu, the second-highest level on record, leaving several Asian buyers unable to complete spot purchases.
"With the risks of gas supply (and the high prices), the comeback of coal is likely to last much longer than expected," said Commerzbank in its report on EU emissions trading published Monday.
