Australia: Coal exports from Newcastle port stop due to heavy rainfall

The world's biggest coal export port, Newcastle has notified that the ship movement at the port has been affected by heavy rainfall, which hit the east coast of Australia causing the worst flooding in half a century.

The port has decided to halt ship loading activities starting today from 11 am which will continue for the next two weeks at least.

In addition to this Australia's Hunter Valley coal rail lines that shipped 158 mn t of coal last year to Newcastle, has also been shut due to flooding in the state of New South Wales, halting deliveries into the port of Newcastle, the world's biggest coal export port. The Port of Newcastle has two coal terminals with a total annual capacity of 145 million tonnes.

Heavy rainfall and with more severe flooding expected beyond the current impacts to the network, strong winds, fallen trees and debris, power failures and fallen power lines and power poles are all concerns which led to operations being halted, according to market sources. The tracks would open only when conditions are safe and water levels recede.

Impact on the Indian market

Australian thermal coal prices are expected to shoot up in the coming days. 5500 NAR Australian coal prices till last week were at $58-59/t, FoB Newcastle basis. Although, Indian importers were booking a large quantity of Australian coal since October last year amid an informal ban by China on it, they have moved to the sidelines since a month amid escalated freight.

Indian demand for Australian coal is set recede as prices rise. The freight for panamax vessel between Australia and India is currently assessed at $23/t, which was around $10 a year back and $16/t, a month back.

Outlook

The raw material cost for imported coal users in India is going to rise amid soared freight rates and restricted coal supply from Australian and South African. CoalMint expects demand for domestic coal to rise in India, although it is still a burden for manufacturers based in the coastal belt due to high inland transportation cost.