<article><p class="lead">Australia's Newcastle Port must increase coal shipments by more than 20pc in December from November if it is to match the depressed volumes achieved in 2020, although the weather in its home state of New South Wales (NSW) is against it.</p><p>Newcastle needs to ship 14.75mn t in December for 2021 exports to match those achieved in 2020, which was a weak year for thermal and coking coal demand because of the first stringent rounds of Covid-19 lockdowns. It would need to ship a record breaking 21.46mn t for 2021 to match 2019, which would be 36pc more than the monthly maximum of 15.73mn t set in June 2019.</p><p>Demand for thermal and coking coal was much stronger in 2021 than 2020, which was reflected a steep rise in prices, particularly in the second half of the year. But Newcastle, which is Australia's largest exporting port of thermal and semi-soft coking coal, has been unable to boost throughput to match the higher demand. </p><p>Newcastle port shipped 12.16mn t of coal in November, according to data from the Newcastle Port Authority. This was <a href="https://direct.argusmedia.com/newsandanalysis/article/2271870">down from 14.25mn t in October</a> but up from 11.07mn t in November 2020, when storms damaged one of the two shiploaders at the Newcastle Coal Infrastructure Group (NCIG) terminal. </p><p>Storms also affected shipments this November, with vessels ordered out to sea because of strong winds and heavy swells and inland flooding disrupting deliveries to the port. Deliveries were also disrupted by rail maintenance at the beginning and end of the month, as well as by climate change protestors blocking rain lines in the first half of the month.</p><h3>Bad weather persists</h3><p class="lead">There is no rail maintenance planned for December, but the stormy weather is persisting in NSW, with strong winds and above average rainfall forecast for the coming week. This could make it difficult for shipments to increase to allow 2021 exports to match 2020.</p><p>NCIG loaded 3.75mn t of coal in November, down from 4.86mn t in October but up from 3.61mn t in November 2020 when <a href="https://direct.argusmedia.com/newsandanalysis/article/2188017">heavy storms damaged one of its two shiploaders</a> putting it out of action until mid-July. The fall in November shipments reverses a three-month ramp-up in NCIG shipments during August-September.</p><p>Weak November shipments by NCIG and <a href="https://direct.argusmedia.com/newsandanalysis/article/2278777">Port Waratah Coal Services</a> has contributed to a doubling of the vessel queue outside the port over the past month to 40 today from 14 at the beginning of November. </p><p>Thermal coal prices have eased from record highs in mid-October but are still above long-term averages. Argus last assessed the high-grade 6,000 kcal/kg NAR thermal coal price at $159.64/t fob Newcastle on 3 December, down from $251.43/t on 15 October but up from $65/t a year earlier. It assessed lower grade 5,500 kcal/kg coal at $97.76/t fob Newcastle on 3 December, down from a high of $164/t on 22 October.</p><p>The heat-adjusted premium on a NAR 6,000 basis for higher grade thermal coal was $52.99/t on 3 December, up from $36.17/t on 28 October but was down from $79.57/t on 15 October. The spread is still much wider than average and up from as low as $1.65/t last year before Beijing's ban on Australian coal took full effect.</p><p>Around 10pc of Newcastle's coal exports are semi-soft coking coal. Argus last assessed semi-soft coking coal prices at $225/t fob Australia on 7 December, up from $92.90/t on 7 June. </p><p class="bylines">By Jo Clarke</p><p><div class="picture"><div><span class="pic_title">Newcastle vessel queue</span> <span class="units">(ships)</span></div><img src="https://argus-public-assets-us.s3.amazonaws.com/2021/12/08/newcastlevesselqueue08122021125942.jpg"></div></p><p><div class="picture"><div><span class="pic_title">Newcastle coal exports</span> <span class="units">(mn t)</span></div><img src="https://argus-public-assets-us.s3.amazonaws.com/2021/12/08/newcastlecoalexports08122021125724.jpg"></div></p></article>
