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Queensland coal ports reopen as Cyclone Iris weakens

05 Apr 2018 08:26 (+01:00 GMT)
Queensland coal ports reopen as Cyclone Iris weakens

Singapore, 5 April (Argus) — The Abbot Point and Hay Point coal export terminals in northern Queensland have reopened as Cyclone Iris continues to weaken off the state's southeast coast.

The cyclone is still a category 1 storm, but is expected to continue losing strength before transitioning to a tropical low by late afternoon today.

Coking coal market participants have welcomed the developments, after a series of force majeure declarations of varying scales yesterday raised concerns among some Asia-Pacific steelmakers that were hit by supply shocks caused by Cyclone Debbie a year ago and Cyclone Yasi in 2011.

The force majeure at the Dalrymple Bay Coal Terminal (DBCT) has not yet been lifted.

"It has become clear at this point at the situation should be less serious compared to Cyclone Debbie last year," a Japanese trader said. "But there are still some concerns about high seas, which can further delay cargo loadings even if the ports are reopened."

Several Australian mine operators, including UK-South African mining firm Anglo American and Switzerland-based Glencore, have declared force majeure on a limited number of contracts with some customers, especially for prompt-loading cargoes loading at DBCT, market participants said. This has not been confirmed by the companies.

Producers were likely issuing force majeure notices on cargoes that have been delayed from loading since 31 March as the cyclone approached. These declarations allow producers to avoid demurrage costs of about $15,000/d through this weekend, when DBCT is expected to allow vessels to berth at the port again.

"These producers will be selective in declaring force majeure on a vessel-by-vessel basis because they have no way of knowing when port operations will restart. DBCT could be up and running again before the weekend, but it is really up to the port authorities and safety is their top concern," an Australia supplier said.

Market participants are continuing to monitor the situation for an indication of how long DBCT will remain closed and how much port congestion they can expect from the aftermath.

But the recent increase in spot supply availability has allowed steel mills to restock coking coal to levels that can withstand moderate delays in receiving new shipments, an Indian steelmaker said.

"Previously there were a lot of cargoes offered on the spot market, so most buyers should have met their requirements," the steelmaker said. "April is a potential monsoon disruption month [in India], which steelmakers would be cognizant of and will keep their inventory levels high during this period. So delays of just a few days should not impact them much."