Floods force Asian steel mills to look elsewhere for coal

(Source: The Australian)

JAPAN and South Korea have been seeking alternative suppliers of coking coal for their steel mills since the scale of the Australian floods became apparent earlier this month. Japanese steel mills, which last year secured more than 50 per cent of their coking coal from Australia,
are looking to North America, Africa and Indonesia. South Korea is the second-gest importer of Australian coal after Japan.

Mongolia - which has just begun to tap the world's second-gest coal seam - is also expected to be a threat to Australia's market share.

Chinese imports of coking coal increased from 6.85 million tonnes in 2008 to 34.49 million in 2009. But with the world's gest coal reserves, China, the world gest steelmaker, has only recently become a coal importer. Australia provided about 38 per cent of China's coal imports, said Galaxy Futures analyst Liu Huiru.
"Along with the recovery of the international economy, China will face competition from other countries in demand for coke," Ms Liu said.
"Imports from Australia, the US and Canada might decrease, while imports from Mongolia might increase, and the same with Russia."

Major coking suppliers in China's coal producing provinces of Shanxi and Hebei had raised prices about 100 yuan ($15.40) a tonne since the start of the year, especially since news of the floods spread, said Mysteel.com analyst Zhu Xi'an. "So far the floods are a short-term effect, but if the situation in Australia does not improve by March the market here might have a stronger response."