daytrades jan 5 afternoon, page-79

This on Bloomberg:

Coking Coal Price May Exceed $300 on Australian Floods (Update1)
Share Business ExchangeTwitterFacebook| Email | Print | A A A
By Robert Fenner and Ben Sharples

Jan. 5 (Bloomberg) -- Steelmaking coal contract prices may rise to more than $300 a metric ton after the worst floods in 50 years disrupted output from producers including BHP Billiton Ltd. and Rio Tinto Group in Australia?s Queensland state.

Flooding may cut as much as 10 million tons of coking coal from the market if disruptions to mining last six weeks, Daiwa Capital Markets Melbourne-based analyst David Brennan said in a research note yesterday.

BHP, Rio, Macarthur Coal Ltd. and Anglo American Plc are among producers that have declared force majeure, a legal clause invoked by companies when they can?t meet obligations because of circumstances beyond their control. Record rainfall has spread floods across an area the size of France and Germany, forcing the evacuation of towns, closing mines and spoiling crops.

Steelmakers were confronted with a threefold increase in annual contract prices to about $300 a ton in 2008 after heavy rains and floods affected mining in Queensland. Mills agreed to pay $225 a ton for hard coking coal under a three-month accord starting Jan. 1 this year, Bank of America Merrill Lynch analysts wrote in a Dec. 21 report.

Flooding has cut output of steelmaking coal by 3 million tons and of the thermal variety burned at power-stations by 1.5 million tons, according to estimates from Macquarie Group Ltd. analyst Colin Hamilton.

To contact the reporters on this story: Robert Fenner in Melbourne at [email protected]; Ben Sharples in Melbourne at [email protected]