Bad weather disrupts Queensland coking coal logistics

Heavy rain and stormy seas in Australia's Queensland have forced coking coal export terminals at the Dalrymple Bay Coal Terminal (DBCT) and Hay Point to halt vessels from berthing until 15 March. All berthing and loading operations at Abbot Point will also be suspended from tomorrow.

While Queensland's other main coal export terminal at Gladstone remains operational, some producers are still experiencing rail cancellations because of heavy rain and have been forced to slow production.

These delays could reverse expectations on prices. The coking coal market had been poised for a sharp downturn amid weaker steel demand earlier this week, although tight supplies from Australia could act as a counterbalance.

As of today, 30 vessels were waiting in the queue at Hay Point with another 28 vessels waiting to load cargoes at DBCT, the highest levels of the year.

"Now I would say the market looks firm," an Indian buyer said.

The Goonyella rail network will also have scheduled maintenance during 11-12 March.

A tropical low is currently developing offshore over the Coral Sea. Although the weather system is expected to continue away from the Australian coast, there is a chance it could circle back north towards Abbot Point over this weekend.

"We expect more rains to come next week," an Australian supplier said. "Even if the weak tropical low over the Gulf of Carpentaria does not eventually develop into a cyclone, we expect continuing rains to be enough to cause quite a bit of disruption to our deliveries."

The Argus assessment for premium hard low-volatile coking coal has increased by 6pc over the past month to $159.50/t fob Australia today despite weaker demand from most main steel-producing regions. The onset of the rainy season in Queensland in February has consistently delayed coal deliveries and slowed production in past years, despite operations rapidly returning to normal in most cases.

By Dylan Wong

source: Argus Media