Coking coal posts record surge to near $300 on Aussie curbs

Bloomberg

The largest disruption to Australian metallurgical coal exports in six years has caused a record surge in spot prices after flooding from cyclone Debbie swamped rail tracks and cut deliveries to ports.
Hard coking coal jumped 86 percent to $283.10 a metric ton this week, the biggest gain in data going back four years, according to The Steel Index. It’s the highest price since December 9. Prices rose 34 percent. BHP Billiton Ltd. and Peabody Energy Corp. are among miners that have declared force majeure after rail lines were closed following heavy rain last week. While ports are open, they are operating at reduced rates.
“Buyers are scouring the globe for supply, with Russia and domestic Chinese coal now being sought,” Tom Kenny, an economist with Australia & New Zealand Banking Group Ltd., said in a note. As prices jumped above $200 a ton “buyers desperately tried to secure supplies in face of the disruption.”
The disruption in the world’s biggest exporter of metallurgical coal hit as miners negotiate supply contracts with Japan’s steelmakers, which are reeling after prices surged amid China’s effort to trim output. Australia’s Queensland state, where rain also caused landslides on parts of the rail network, accounts for about 50 percent of global seaborne trade, according to Morgan Stanley.
Quarterly contracts, which are yet to be settled for the current period, were agreed at $285 a ton for the first three months of this year, boosted by output cuts in China. Morgan Stanley and AME Group forecast a second-quarter price of $180, while Australia’s commodity forecaster predicts they may average $194 in 2017. The contract surged to a record $330 in 2011 after floods in Australia.