Highlights
The biggest floods in Queensland, Australia, in half a century are turning into a windfall for U.S. coal mining companies anticipating record profits and the highest exports in 15 years.
Shipments from the U.S. are poised to rise 8.8 percent this year to about 86.5 million tons, the most since 1996, the Energy Department in Washington said Feb. 8. Demand for American coal is increasing after floods devastated an area of Australia twice the size of Texas. Queensland’s combined output of steelmaking and thermal coal may be reduced by 23 million metric tons, Bank of America Merrill Lynch said in a Jan. 25 report. That’s about 13 percent of the state’s exports in the year ended in June.
Coking coal from Australia used to forge steel sold for an average of $325 a metric ton in the week to Feb. 4, exceeding the record $300 a ton set in 2008 when there was also flooding, according to IHS McCloskey, a Petersfield, England-based researcher.
Power station coal at the country’s Newcastle port, a benchmark for Asia, has soared 44 percent since Jan. 1, according to data from IHS McCloskey and Bloomberg.
Disruptions will drive the average price of U.S. Eastern coal used to make steel up 13 percent to $254 a ton and the fuel used in power plants to $74 a ton, 20 percent higher than a year ago, according to the median of 11 analysts in a Bloomberg News survey. That may spur a fivefold profit gain for Alpha Natural Resources Inc. and 75 percent for Walter Energy Inc., while boosting President Barack Obama’s goal of doubling exports by 2014.
“Are we pushing the price? You’re damn straight we are,” said Bob Pusateri, executive vice president of sales and marketing at Canonsburg, Pennsylvania-based Consol Energy Inc., which operates 18 mines across six U.S. states. “If there is a short-term phenomenon because of weather-related issues, the coal companies are going to take advantage of it.”
About 15 million to 20 million tons of coal may be lost from Australia because of the flooding and that’s exacerbated by inclement weather in South Africa, Colombia and Indonesia, Peabody Energy Corp. Chief Executive Officer Gregory Boyce said on a Jan. 26 conference call. That’s about 0.3 percent of 2009’s global coal production, according to Energy Department data. Peabody is the largest U.S. coal producer.
The Queensland Resources Council estimates lost coal output of at least 15 million tons. The floods covered an area the size of France and Germany at their peak, swamping mines, railways and damaging bridges.
The source article Queensland Spurs U.S. Coal Exports to 15-Year High - Bloomberg .
