Australia raises La Nina weather event to 70pc chance

Australia has increased the likelihood that a La Nina-type weather event will occur this year to a 70pc probability from a previous 50pc. This raises the prospect that the coal-producing Queensland and New South Wales (NSW) states may receive above average rainfall and increased cyclone activity by the end of this year.

The states' coal-producing regions have been subject to flooding in previous [La Nina periods] (https://direct.argusmedia.com/newsandanalysis/article/2113856). There were two La Nina events with widespread flooding during 2010-12, including flooding in the coking coal-rich Bowen basin region in early 2011.

Australia's Bureau of Meteorology (BoM) raised its El Nino-Oscillation Outlook to La Nina alert level status, meaning the chance of a La Nina occurring this year has increased to 70pc, roughly three times the normal likelihood. A La Nina alert is not a guarantee that La Nina will occur but that most of the typical indicators of La Nina are in place, the BoM said.

The last significant La Nina event was in 2010-11, which was the Australia's wettest two-year period on record. The last time the Pacific Ocean approached La Nina conditions was in late 2017 but thresholds were only briefly exceeded.

La Nina results in above average winter-spring rainfall for Australia, particularly across eastern, central and northern regions, said BoM's manager of climate operations Andrew Watkins. "It typically also brings cooler and cloudier days, more tropical cyclones, and an earlier onset of the first rains of the wet season across the north."

Queensland is Australia's largest hard coking coal exporting state and is subject to cyclones, while NSW is the country's largest thermal coal exporting state. NSW does not typically receive cyclones and is subject to heavy storms that have previously forced the temporary closure of coal export ports at Newcastle and Port Kembla.

Hard coking and thermal coal prices have softened this year because of the impact of the Covid-19 pandemic on energy demand and global steel output. The Argus assessed metallurgical coal premium hard low-volatile fob Australia was last settled at $106.15/t compared with $136.70/t at the end of 2019. The Argus Newcastle thermal coal 6,000 kcal/kg NAR fob assessment last settled at $48.30/t compared with $65.70/t at the end of last year.

By Kevin Morrison