Wild weather, Covid-19 slow Australian coal exports

Source : https://www.argusmedia.com/en/news/2247143-wild-weather-covid19-slow-australian-coal-exports


Bad weather and a spreading Covid-19 outbreak are disrupting activity at coal ports in the Australian state of New South Wales.

Ships have been ordered away from anchorages outside the NSW ports of Newcastle and Port Kembla because of storms, just as delayed Covid testing is straining supply chains, leaving shipping queues outside Newcastle stubbornly above 40 vessels.

The storms that have hit the NSW coast are expected to ease tomorrow, allowing ships to return to anchorage. But the Covid-19 outbreak in Newcastle and other parts of NSW is likely to continue to hit supply chains.

Regional NSW has been largely untouched by the pandemic, but the outbreak of the Delta strain of Covid-19 that has forced state capital Sydney into lockdown for two months has now spread. The more isolated areas of NSW do not have as much testing capacity as metropolitan areas, and these shortages are now starting to affect output at mining firms as workers are forced to stay home and isolate for several days while they await test results.

Chinese-owned mining company Yancoal highlighted the spread of Covid-19 into regional areas as a risk to achieving its ambitious production target of 39mn t for 2021. Further spread of the virus could disrupt production even more, with some mines already operating at around 10pc below normal staffing levels since the outbreak spread into the Hunter Valley and Newcastle area earlier this month.

Existing border closures have created a shortage of skilled labour across the mining sector in Australia, making it more difficult for Covid-19 shortfalls to be covered by contractors or overtime.

The Hunter and New England region of NSW has recorded 165 cases of Covid-19 in the past four weeks, which is the most of any regional area in Australia and follows many months of zero cases. NSW is hoping to ease some lockdown restrictions in the coming weeks as vaccination coverage rises but is likely to continue to insist that tested workers stay at home until they receive a negative test result.

The ship queue outside Newcastle remained at 42 ships today and has now held close to record highs of over 40 for more than two months. The queue is pushing up demurrage costs, although these are being more than offset by record prices for high-grade thermal coal exports from Newcastle.

Argus last assessed high-grade NAR 6,000 kcal/kg Australian thermal coal prices at $169.96/t fob Newcastle on 20 August, up from $120.58/t on 4 June and a low of $46.18/t on 4 September. Argus assessed lower-grade NAR 5,500 kcal/kg coal at $101.27/t fob Newcastle on 20 August, up from $70.10/t on 4 June and $35.04/t on 4 September.

The heat-adjusted premium on a NAR 6,000 kcal/kg basis for higher-grade thermal coal was $59.48/t on 20 August, down slightly from a record $60.09/t on 13 August but up from $50.52/t on 31 July, $44.11/t on 4 June and $8.65/t at the end of August last year.

Shipments of semi-soft coking coal account for around 10pc of Newcastle's total exports. Argus assessed the semi-soft mid-volatile coking coal price at $126.90/t fob Australia on 23 August, up from $92.90/t on 31 May and $71.20/t on 31 December.


By Jo Clarke

Related Regular News: