Queensland coal vessel queues blow out again

Coal vessel queues have lengthened again along Australia's Queensland coast, as ports struggle to keep pace with demand from mining firms seeking to clear backlogs.

The Queensland wet season saw disruption largely focused on the four large ports that export coal from the state, rather than the mines many of which have been largely unaffected by heavy rainfall. This has led to the build-up of inland stocks, which mining firms are keen to clear ahead of the end of the 2018-19 Australian fiscal year on 30 June.

The ports, particularly the large Dalrymple Bay Coal Terminal (DBCT), have struggled to meet this demand for increased shipments because of a series of maintenance issues at the port and delivery issues through the rail network that connects mines to ports. This has led to another spike in vessel queues, with 53 waiting outside the DBCT and Hay Point ports at Mackay and a further 20 offshore Gladstone, as well as around eight offshore Abbot Point, according to shipping trackers.

DBCT, which has seen the majority of the congestion over the past eight months, exported at an average rate of 62.4mn t/yr during April compared with a target of 79.09mn t/yr for the month. This implies it will have shipped around 5.13mn t in April, which is down on the average of 5.79mn t/month in 2018. The port has had a slow three months with 4.48mn t shipped in February and 5.28mn t shipped in March. The below average shipments have been because of a series of maintenance issues, stormy weather and a derailment that stopped deliveries for several days in March. The maintenance disruptions included the closure of one of the three DBCT shiploaders in April, which also slowed loadings.

Vessel queues at DBCT have increased to 36 today from 27 on 8 April, according to the port operator. The queue at DBCT fell to as low as 21 on 6 February before a closure because of a storm, having been as high as 56 on 10 December.

The port does appear to be increasing operations, with the pace of both inbound and outbound deliveries increasing in the second half of April.

The combination of ports increasing operational activity and mining firms looking to run down stocks at mines could increase coal shipments over the next couple of months, which could put downwards pressure on prices.

Argus last assessed the price for premium hard coking coal, which is largely exported from Queensland, at $206/t fob Australia. It has been around $200/t for most of the past six months, up from a low of around $75/t in early 2016. This sustained higher price has led to some production creep in Queensland and the restart of some mothballed mines.

The high-grade NAR 6,000 kcal/kg thermal coal price has also eased to $85.92/t fob Newcastle from $105.03/t six months ago.

Official April export data for all four major ports is expected to be released in the next week.