Coking coal may hit $500 a tonne:analysts

[] — London – Coking coal prices currently trading at over $300 a tonne may reach $500 due to the intensification of rain in Australia, which provides nearly half the world’s coal for steel-making, analysts Wood Mackenzie said on Monday.

Disastrous floods which began three weeks ago halted thermal and coking coal exports from Queensland state ports and Brisbane and are now spreading to Victoria.

“Over half of Australian exports are likely to be affected and the impact of the decrease in exports will be felt strongly in the global coal market,” WoodMac said in a research note.

“As the rainfalls have intensified on January 11, it is reasonable to assume that hard coking coal prices could reach between $400 and $500 per tonne.

“However, because the situation is still ongoing with more rain possible, the magnitude of the full supply impact is uncertain.”

Coking coal is more vulnerable to supply disruptions than thermal coal because supply has been extremely tight throughout 2010.

Most exporters were already producing at capacity before the Australian floods.