Shares in Whitehaven Coal (WHC) retreated somewhat in late trading yesterday after they jumped sharply in the wake of a upwing in global spot coal prices because of the impact of flooding in central Queensland coal mines and restrictions on exports.
Whitehaven shares closed the day at $3.27 for a rise of 5.4% – at one stage they peaked at $3.44, up more than 10%. Whitehaven shares are up nearly 19% in the past week.
Coking coal prices have soared 15% to an 11-week high after former Cyclone Debbie tore through the Queensland coalfields.
Spot markets for high quality metallurgical coal rose from $US152.30 per tonne to $US175.70 per tonne overnight, as steelmakers scrambled to buy cargoes ahead of an expected shortage
Thermal coal prices also jumped – up 6.4% to $US89.50.
Queensland produces more than half the world’s seaborne coking coal and the rail line that carried around half of Queensland’s exports – from the Goonyella region of the Bowen Basin (operated by Aurizon) – could be out of operation for up to five weeks while repairs are carried out.
With holidays in China on Monday and yesterday, Chinese steel mills got caught short by the impact of Debbie and have rushed to buy spot cargoes from the US (at higher prices and higher shipping costs). Canadian shippers such as Teck Resources could also get a temporary fillip.
Aurizon shares dipped another 6 cents to $5.13.
Three other railways that carry Queensland coal are also out of action at the moment, but should be repaired faster than the Goonyella line. the line to Mrisbane from the small West Moreton field is back in action, while mines and the port of Newcastle, the world’s largest, have not been impacted.
Miners like BHP Billiton, Rio Tinto, Anglo American, Glencore, Stanmore Coal and Wesfarmers are likely to see exports interrupted. Most mines will be back in operation by this weekend.
South32 shares rose more than 2% to $2.86 in Australia and rose again in London overnight. But the current surge in prices won’t last – when the the rail and port operations are fixed up, they will fall.
