CANBERRA (Reuters) - Heavy summer rains across eastern Australia prompted authorities to issue flood warnings for vast areas of Queensland and New South Wales states on Thursday, including coal mining areas in the Hunter Valley.
The Bureau of Meteorology issued the flood warnings with heavy rain expected over the next 24 hours, following saturating rains over the past week which have already swelled rivers in New South Wales and Queensland.
Floods and wild weather last year inundated coal mines and damaged crops. Australia is the world’s largest coal exporter and since it accounts for roughly two-thirds of global trade of coking coal, used for steel production, fresh floods particularly in Queensland could boost prices.
“Heavy rainfall and flooding along the east coast of Australia is expected over the next few weeks and is likely to further impact production and drive up Newcastle coal prices,” Sereme Lim, an analyst at Standard Chartered Research, said in a note, but added that lower demand from buyers may limit the price impact.
Floods pushed spot metallurgical coal prices to a high of over $350 per tonne early last year after flooding brought coal production to a near standstill in Queensland state. Prices are now around $220 per tonne.
Thermal coal prices were also pushed up, with the benchmark price for thermal coal to Japan, Australia’s largest coal buyer, settled at a record $129.85 per tonne in April 2011. Prices have since drifted lower to around $118 per tonne.
Emergency services have ordered thousands of people to prepare to evacuate, while some residents near the western New South Wales town of Moree have been ordered to leave their homes.
The New South Wales State Emergency Service estimates 12,000 could be isolated by the flooding by late Thursday.
The flooding over the past week could also affect crops, the government’s commodities forecaster ABARES said on Thursday, adding the rain has reportedly affected sugarcane, soybeans and corn, and could affect crop yields in New South Wales.
Flash floods across Australia’s Queensland and New South Wales states in early 2011 killed around 35 people, swamped 30,000 houses, swamped coal mines and wiped out roads, bridges and rail lines, denting Australia’s economic growth.
Storm damage is estimated to have cut Australia’s commodity-weighted economy’s gross domestic product growth by A$20 billion, or 1.5 percent, in the 2010-2011 financial year.
Reporting By Maggie Lu YueYang; Additional reporting by Rebekah Kebede; Editing by Ed Davies