Australia supplies more than half of the global exports in hard coking coal, a prime commodity used in steelmaking. The flooding of mines in the state of Queensland has increased the need for alternative export sources for coking coal, including from U.S. coal mining firms.
The Queensland Resources Council (QRC) estimates about “15 per cent of the state’s coal mines are in full production, with 60 per cent operating under restrictions and a further 25 per cent yet to resume normal operations," according to a January 17, 2011 statement by Michael Roche, QRC chief executive.
Asian Markets: Steelmakers Coking Coal Demand
The world's fifth largest steelmaker is Japan's JFE Steel Corp. As a result of Australia's export operational slowdowns, JFE has reported that it intends to boost purchases of coking coal from China, Indonesia, Russia and the U.S., according to a Reuters report on January 18, 2011.
Nippon Steel Corp, the world's fourth largest steelmaker and Japan’s biggest steelmaker by sales, also anticipates the rise in coking coal prices and will likely follow JFE’s led in boosting coking coal purchases from non-Australian markets.
Lift in U.S. Coking Coal Export Production and Prices
Macquarie analysts estimate that about 37 percent of the world’s traded coking coal is affected by the Australian floods. Both Macquarie and Morgan Stanley have raised forecasts for coal, among other commodities, according to the WSJ.com . Macquarie raised its forecast estimates 10%-15% for hard coking coal over the coming 12 months.
"It will be good times for the U.S. coking coal guys," said James Thompson, managing editor for U.S. Coal Review. "We're seeing more demand for U.S. coal, and we'll see higher prices."
By January 12, 2011, international coking coal rose to USD 295 a tonne. Energy Publishing Inc., a Tennessee based data provider, reports that low volatility coking coal spot prices increased 9.4%, or USD 26.25, to USD 306.25 a tonne a week later.
U.S.-based Exporters: Alpha Natural Resources, Consol Energy and Xcoal Energy
Consol Energy, the largest coal exporter in the U.S., is "looking to capture higher prices for the coal we export in 2011," stated Daniel Zajdel, a Consol spokesman.
Alpha Natural Resources Inc. is the third largest U.S. coal mining firm. It raised its 2011 forecast for coking coal on demand increases resulting from Australia’s worst flooding in 50 years.
Xcoal Energy & Resources, the Pennsylvania-based coal export firm, also raised its coal export estimates for 2011 by 8-10 million mt, according to a company statement issued January 17, 2011. Xcoal Energy exported 55 million mt of coking coal in 2010.
Vanessa Cross - Vanessa Cross is a freelance writer who writes about international trade, business law and small business development issues.
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