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China coking coal surges amid shipment disruptions after Cyclone Debbie

Published 05/04/2017, 12:46 pm
Updated 05/04/2017, 12:50 pm
© Reuters.  China coking coal surges amid shipment disruptions after Cyclone Debbie
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* Australian coking coal futures in Singapore up 43 pct

* China reopens after 2-day public holiday

* Shanghai rebar, Dalian iron ore also advance

By Manolo Serapio Jr

MANILA, April 5 (Reuters) - Chinese coking coal futures jumped more than 7 percent on Wednesday to a four-month high amid worries over tighter supply after Cyclone Debbie slammed into top supplier Australia, crippling exports of the steelmaking raw material.

The spike in Chinese prices followed a 43 percent surge in Singapore-listed futures of Australian premium coking coal over the past two days. China's financial markets were shut on Monday and Tuesday for public holidays.

Coking coal for May delivery on the Dalian Commodity Exchange DJMcv1 was up 7 percent at 1,357.50 yuan ($197) a tonne by 0220 GMT, after having climbed as high as 1,363.50 yuan, its loftiest since Dec. 1.

A critical mountain pass on the railway connecting Australia's biggest coking coal mines to ports has been hit by landslides and buckled tracks caused by Cyclone Debbie, forcing some producers, including top exporter BHP Billiton (LON:BLT) BHP.AX , to declare force majeure on coal cargoes. line's operator, Aurizon Holdings AZJ.AX , said it would take around five weeks to finish repairs and that alternative routes would be considered.

In a note to clients, analysts at ANZ Bank wrote, "reports that mines are back up and running quashed earlier fears of a complete shutdown of the industry. Port stocks are also expected to buffer some of the impact of the shutdown of the rail network."

In terms of alternative supplies to Chinese steelmakers, "there's U.S., Canada and potentially Mongolia," said one Singapore-based trader.

The disruption may increase the negotiating power of coking coal miners in second-quarter term contract dealings with Japanese steelmakers, Argonaut Securities analyst Helen Lau said, who earlier saw the price being settled at around $160 per tonne.

Australian premium coking coal futures on the Singapore Exchange SCAFc1 stood at $225 a tonne on Tuesday.

The strength in coking coal spread to other ferrous commodities.

The most-active rebar on the Shanghai Futures Exchange SRBcv1 rose 2.8 percent to 3,254 yuan a tonne. Dalian iron ore DCIOcv1 advanced 1.8 percent to 566 yuan per tonne.

Dalian coke DCJcv1 was up 3.7 percent at 1,960.50 yuan a tonne, having touched a nearly five-month peak of 1,969 yuan earlier.

($1 = 6.8869 Chinese yuan)

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