Nuclear crisis has implications for coal - Financial Times

By Javier Blas, Commodities Editor
Published: March 17 2011 08:56 | Last updated: March 17 2011 08:56

The consequences of Japan’s multi-faceted disaster – the earthquake, tsunami and now its nuclear crisis – for the $100bn a year seaborne thermal coal market are slowly becoming clear. Even if over the short-term the impact is mixed, beyond a few months it is decidedly bullish.

The combination will be positive for big coal miners such as Xstrata, Bumi of Indonesia, Anglo American and US-based Peabody , and for the biggest traders of the commodity, including Glencore – which handles around 30 per cent of the seaborne coal market – Noble Group of Hong Kong and US-based Cargill.

Over the short-term, prompt demand for seaborne thermal coal has fallen in Japan, as economic activity slows and, therefore, power consumption. Moreover, several thermal power plants have been damaged, so utilities have asked miners to defer cargoes.

With little appetite for the coal elsewhere in the Asian region – the arbitrage opportunity with China is firmly closed as domestic prices there are low – thermal coal prices in the Australian port of Newcastle, a benchmark for the Pacific basin, have remained stable at around $128 a tonne, below the two-year peak of $135 in January. more ...