By Jo Clarke

August 3, 2022 - Coal exports from Port Waratah Coal Services (PWCS) terminals at Newcastle port in Australia slipped to their lowest monthly level in at least five years in July because of flooding.

PWCS shipped 4.98mn t of coal in July, down from 8.7mn t in June and from 10.57mn t in July last year. The port has been operating normally for the past fortnight, after heavy rainfall at the beginning of July cut deliveries to the port and forced ships off its anchorage. But a drier start to August could see exports rise.

The ship queue outside Newcastle in New South Wales eased to 48 on 1 August from over 60 a week earlier, as the port works to clear the backlog of shipments caused by flooding last month that closed its [feeder rail network for ten days] (https://direct.argusmedia.com/newsandanalysis/article/2351687). But the ship queue today rose from 32 vessels at the beginning of July. Ship turnaround time rose to 9.75 days in July from 5.88 days in June and 2.26 days in May.

The Australian Bureau of Meteorology (BoM) has forecast a drier start to August in New South Wales

The forecast is for a drier start to August in New South Wales, but flooding could return if there is more rain on the saturated ground in Hunter Valley, from where the coal for exports from Newcastle is sourced. Wetter weather is likely to persist in the medium term, BoM issuing a [La Nina watch for 2022-23] (https://direct.argusmedia.com/newsandanalysis/article/2343508) and forecasting above average rainfall for eastern Australia during August-October.

Australian Rail Track Corp (ARTC), the Hunter Valley rail operator, pushed back major maintenance planned for 22-25 July to later this year, as it tries to clear the backlog of railings, which was the result of floods in early July. The next major maintenance is not scheduled until 5-7 October, allowing some time for catchup shipments to be loaded through Newcastle.

Stocks at the PWCS terminals rose to 1.81mn t at the end of July from 1.63mn t in June, but were below the average of 1.86mn t/month last year. Australia's Newcastle Coal Infrastructure does not release monthly data for its terminal.

Argus last assessed high-grade 6,000 kcal/kg NAR thermal coal at $423.70/t fob Newcastle on 29 July, up from $383.82/t on 1 July and close to the peak of $425.90/t on 20 May, as well as up from $151.90/t a year earlier. It assessed lower grade 5,500 kcal/kg coal at $212.84/t fob Newcastle on 29 July, up from $188.73/t on 1 July but down from a peak of $287.15/t on 11 March.

The heat-adjusted premium for higher grade thermal coal on a NAR 6,000 basis was at $191.51/t on 29 July, up from $177.93/t on 1 July but down from $202.35/t on 20 May and compared with a very low $1.65/t in 2019, before a Chinese ban on Australian coal took full effect.

Argus last assessed the semi-soft mid-volatile metallurgical coal price at $180.60/t fob Australia on 29 July, down from $260/t on 1 July and from $400/t on 31 May, but up from $126.90/t on 19 July last year.