Coking coal prices have been on a bit of run recently, boosted by the prospect of disruptions to around half the world’s seaborne supply as a result of damage caused by Cyclone Debbie.
The chart below from the Commonwealth Bank tells the story.
Prices are skyrocketing, surging back above the $US300 a tonne level on Monday, according to pricing from the Steel Index.
Just a bit of jump from the $US150 a tonne level the spot price was trading at just a couple of weeks ago.
“Premium coking coal prices are already spiking as shortage concerns intensify,” says Vivek Dhar, mining and energy analyst at the Commonwealth Bank.
According to latest estimates from Aurizon, repairs its Goonyella rail line in Queensland will take another 4 weeks to complete, knocking out around 35-40% of global coking coal seaborne supply.
However, while the chart looks spectacular, Dhar, like many others, thinks prices will likely retrace as supply disruptions to Queensland’s coal industry ease.
“We could see premium coking coal prices spike above $US300 a tonne for potentially another week before prices retreat once again as coal railways resume operations.”
That view is also shared by analysts at Macquarie bank.
“To be clear, in the short term the spot price for metallurgical coal will certainly go up, and perhaps quite rapidly,” it wrote in a note released late last week.
“However, given actual damage to mines is limited, the overall production loss from plan may be relatively negligible. And assuming full capacity is restored on the rails in time, there should be a period of shipment catch-up after the outage.”