The flooding crisis in Sydney and New South Wales, Australia has intensified, affecting coal production and agricultural transport. Foreign media reported that the heavy rains have disrupted coal production in the Hunter Valley region and reduced operations at the main coal export port of Newport. Australian fuel coal prices rose 4% yesterday (22nd), hitting a two-year high. In addition, coal prices in Europe and China also touched a two-month high.
A Yancoal Australia spokesman was quoted as saying that the company’s two open-pit coal mining areas had suspended operations. At the same Time, flooding has blocked logistics and affected the supply of fresh produce as well as the distribution of New Crown vaccines.
Foreign media quoted analysts at Treasure City Futures as pointing out that the recent continuous heavy rainfall in New South Wales and the declaration of a state of natural disaster in some areas are bound to affect the normal mining of coal. Previously in 2011, Australia’s major floods affected its coal exports and raised coal prices. Although there is still a certain gap between the affected areas and the main production area of South Central, but the rising water level of rivers and increased safety risks are bound to affect the coal mining work.
It is worth noting that the heavy rainfall is not only confined to the north central coast of New South Wales, but the neighboring state of Queensland is also undergoing the test of heavy rainfall. More than 95% of Australia’s black coal resources are concentrated in the two major states of New South Wales and Queensland, with the former’s black coal reserves accounting for about 34% of the country’s total, while the latter’s black coal reserves account for about 62% of the country’s total, and are dominated by open-pit mines. Most of the main coal producing areas are concentrated in the east coast of Australia, which is also the largest seaborne coal export base under the geographical advantage. The strong rainfall will also increase the difficulty of port operation, leading to a sharp decrease in export volume and further raising the price of Australian coal.
In addition, the report quoted China Merchants Futures analysts pointed out that, from the scope of the impact of the flood, although not affected the main coal producing areas of New South Wales, but for the Newcastle port and the origin of the transport to the port or there is a certain impact, the impact or more concentrated in the power coal side, coking coal side impact is relatively small. For China, Australian coal has always been obstructed in customs clearance since last October due to quality issues, so this flood in New South Wales will hardly have a significant impact on coking coal and power coal supply. However, this natural disaster will still affect the short-term export of Australian power coal, thus supporting the price of international power coal. The current high daily consumption and low inventory in India will raise the price of non-Australian power coal, which will in turn stimulate the upward movement of domestic power coal prices.
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