Severe flooding in Australia has interrupted coal production, pushing up prices and threatening to constrain world-wide steel output and lead to higher steel prices in some parts of the world.
Torrential rains in the northeastern state of Queensland, the world's biggest exporter of seaborne coal, have idled dozens of mines and shut rail lines and roads needed to transport coal. The floods have already cost coal companies an estimated $1 billion from lost production, according to the Queensland Resources Council.
Roughly 98 million tons of annual steelmaking-coal capacity, equal to 73% of such coal exported from Queensland, is under force majeure, according to Curt Woodworth, an analyst with Macquarie Capital in New York. That is about 37% of the annual, global seaborne supply of coal used by steelmakers.
Prices for steelmaking coal have already shot up 10% on the spot market to about $250 a metric ton, say analysts. "If the infrastructure issues continue, clearly prices are going to continue to head upward," said Jeremy Sussman, an analyst with Brean Murray, Carret & Co.
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