Category 2 Tropical Cyclone Kimi may lift met coal prices: sources

Singapore — The seaborne metallurgical coal market is monitoring the development of Tropical Cyclone Kimi, which has the potential to bring heavy rainfall across costal Queensland and drive up spot prices in the near term, market sources said.

The Australia Bureau of Meteorology (BOM) issued a warning Jan. 18 on Kimi, which was moving south-southeastwards as a category 2 system, and is forecast to become slow moving on Jan. 19, off the coast between Hinchinbrook Island and Townsville.

The BOM warned that heavy rainfall with the potential to produce flash flooding and major river flooding is forecast to affect coastal and adjacent inland areas between Cairns and Ayr overnight and on Jan. 19.

As Queensland is the world's biggest exporter of metallurgical coal, this declaration has put the global met coal industry on alert.

"I think this news is market-friendly as any supply disruption could send a bullish signal to a market that's already running up since the beginning of 2021," an international trader said.

Premium low-volatile hard coking coal prices have increased 21% to $124.50/mt FOB Australia this year to date, from $102.5/mt at the end of December, S&P Global Platts data showed.

Heavy rainfall following Cyclone Debbie in 2017 caused serious disruption to met coal exports out of Queensland, which in turn triggered a 100% spike in prices by the end of April to $304/mt FOB Australia, for premium low vol coal, according to Platts data.

Another trader source said that despite bullish sentiment in the market, however, he would prefer to wait and see until the impact of Kimi becomes clearer in the next few days.

Platts assessed Premium Low-Vol HCC up $1.50/mt at $124.5/mt FOB Australia Jan. 18.