Bloomberg Coking Coal Contract Prices May Gain 15-20% in Second Quarter

Coking coal contract prices may rise 15 percent to 20 percent between April and June from the previous quarter as supplies drop due to floods in Australia, the Indian unit of Standard & Poor’s Ratings Services said. Prices may increase to $260 to $270 a metric ton, reducing operating margins at Indian steel producers, Manoj Mohta, head of Crisil Research, said in an emailed statement. Floods since November have swept Australia’s

Queensland state, shutting coal mines and cutting rail links in the supplier of about half the world’s seaborne supplies of the steelmaking material. “Coking coal accounts for about 45 percent of the raw material costs of non-integrated steel producers in India,” Mohta said. “The run in coking coal prices will affect the margins of these producers, who are already vulnerable to an expected increase in iron ore prices over the next quarter.” Some 85 percent of coal mines are “impaired by excess water,” Queensland Resources Council said Jan. 27.

Lost coal production may total as much as A$9.5 billion ($9.45 billion), the council estimated in its State of the Sector report.