Business

Coal back in demand again, with price spike

Employees unload coal from a truck at a coal mine and processing facility in Liulin, Shanxi province, China, on Thursday, May 19, 2016. Shanxi is facing a challenge shared by a sweeping region across China's industrial north: how to shut down cash-burning mines that employ millions of people whose prospects are uncertain in the new economy promised by President Xi Jinping. Photographer: Qilai Shen/Bloomberg
Employees unload coal from a truck at a coal mine and processing facility in Liulin, Shanxi province, China, on Thursday, May 19, 2016. Shanxi is facing a challenge shared by a sweeping region across China's industrial north: how to shut down cash-burning mines that employ millions of people whose prospects are uncertain in the new economy promised by President Xi Jinping. Photographer: Qilai Shen/Bloomberg Qilai Shen

QUEENSLAND'S dominant commodity, coking coal, is back in demand again with its price spiking to $US153 a tonne in recent weeks, a rise of almost 10%.

China's steel production growth and tighter domestic coal supplies were probably driving the rebound for coal prices, which have been on a roller coaster in the past year.

Critical shortages in China last year drove the price to record territory of $US310 a tonne and earlier this year Cyclone Debbie knocked out the Queensland coal train network forcing the price back above $US300.

It comes as iron ore prices have shown signs of recovery, also because of pollution issues in China and stronger demand for steel which is also a factor in the coking coal price.

Analysts at Platts said a report from financial research company FBR said import data showed a loss in May from Australia in may which had left China more reliant on domestic coking coal and drawing down stockpiles.

"Strong Chinese steel fundamentals offer the best explanation for the recent recovery in met coal prices," FBR said.

"Monthly Chinese steel production has hit an highest in April and has remained near these record levels through May.

"Yet Chinese met coal production has remained relatively constrained."

FBR cited steel margins in China at high levels, as steel prices rose on demand led by rebar amid lower iron ore costs and the decline from an earlier peak in coal prices.

Since the Cyclone Debbie damage, mine production has been surging in a bid to catch up and FBR said Queensland port loadings recovered to 19.8 million tonnes in June, which is above 2016 average monthly shipments of 18.4 million tonnes.



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