(EnergyAsia, June 27 2011, Monday) — The volume and value of Australia’s coal exports are expected to recover strongly in the next fiscal year ending June 30 2012 to reach record highs after declining in the current year to June 30 2011, according to the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES).
In its June quarter review, the agency predicted that for FY2011, Australia will earn more than A$60 billion from exporting a combined 316.8 million tonnes of metallurgical (met) and thermal coal, mostly to energy-hungry Asia. (US$1=A$0.95).
Coal will account for more than 27.5% of Australia’s projected earnings of A$218.3 billion from exporting energy and mineral products in FY2011, compared with 25.2% of A$182 billion for FY2010.
ABARES expects met coal sales earnings to rise by 30.7% to A$41.7 billion while revenue from less-valuable thermal coal for power generation will grow by 30.9% to A$18.3 billion. The volume of met coal exports for steel-making is expected to grow by 14.4% to 164.2 million tonnes, while thermal coal is seen rising by 12.4% to 316.8 million tonnes.
For the current 2010 fiscal year, ABARES has predicted Australia’s total coal exports to fall by nearly 3.6% to 281.8 million tonnes due to lost production following the recent heavy rainfall and floods in the main coal-mining state of Queensland. However, export earnings will still increase by a whopping 26.1% to A$45.9 billion, thanks to sharply higher coal prices over the past year.
The combination of massive rainfall, floods and cyclone damage had caused the biggest slump in Australia’s GDP for 20 years in the first quarter.
The volume of met coal exports are seen falling by nearly 8.8% in the current 2010 fiscal year ending June 30 2011 but will recover on strong global demand for steel from the second half of 2011 through to 2012.
Partly offsetting the decline in met coal exports, Australia’s thermal coal exports will rise by 2% to 138.3 million tonnes in FY2010. Despite the extraordinarily bad weather to hit Queensland state and northern New South Wales from late 2010 to June 2011, miners were still able to start up a number of new mines as well as expand capacity at Mount Arthur and in the Hunter Valley to take advantage of the expanded export-oriented Newcastle Port.
In April 2011, Japanese steel mills and Australian suppliers agreed to a 47% rise in contract prices to US$330 a tonne for high-quality hard coking coal for the June quarter from March.
ABARES said it expects prices to ease in the September and December 2011 quarters on rising production and exports from Queensland mines, which are due to resume operating at capacity by September.
For 2012, the agency expects hard coking coal contract prices to average US$241 a tonne as increased supply from Australia and North America puts downward pressure on prices. But the market will remain supported by strong demand for in steel production in China and India as well as the reconstruction work in Japan following the March 2011 earthquakes and tsunami.
“Over the next 18 months, thermal coal spot prices in the Asia-Pacific market are expected to remain above US$100 a tonne, supported by strong growth in demand for coal from electricity generators in Asia, particularly China, India and South Korea. Japan’s thermal coal imports are also forecast to increase in 2012 as coal-fired electricity generation increases and use of nuclear power facilities falls,” said ABARES.
In March 2011, Australian coal suppliers and Japanese power utilities settled some thermal coal contract prices at around US$130 a tonne a tonne for the Japanese FY 2011 ending March 31 2012. This represented a 32% increase from a year earlier.
The record price, representing a 32% rise over previous contracts, reflected both strong demand in Asia and supply disruptions in Australia, Colombia and Indonesia.
ABARES acting deputy executive director, Kim Ritman, said:
“Forecast increases in export prices and shipments for Australian iron ore and metallurgical coal are the main reasons for the expected increase in mineral resources exports. Strong export performance is also expected for other commodities including thermal coal, gold and alumina.”