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UPDATE 1-China coking coal surges amid shipment disruptions after Cyclone Debbie

Published 05/04/2017, 01:41 pm
Updated 05/04/2017, 01:50 pm
UPDATE 1-China coking coal surges amid shipment disruptions after Cyclone Debbie
BHP
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BHPB
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AZJ
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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

* BHP declares force majeure on coal deliveries (Adds trader comment, updates prices)

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 0323 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.

Chinese steel mills may source coking coal supplies from Russia and Mongolia with the stoppage in Australian exports, traders said.

Market sources on Tuesday said the United States could also be an option. Still, the distance and time involved in shipping from there to China might complicate matters, a Shanghai-based trader said on Wednesday. takes at least 30 to 40 days for U.S. cargoes to reach China, he said.

"It may be better for mills to find a substitute supplier in China. China has good coal resources and should be able to meet demand," the trader said.

China may not have a lot of coking coal in stock because quality of the raw material is affected if stored for a long period, he added.

The disruption in Australian shipments 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 2.5 percent to 3,246 yuan a tonne. Dalian iron ore DCIOcv1 advanced 1.8 percent to 566 yuan per tonne.

Dalian coke DCJcv1 was up 4 percent at 1,967 yuan a tonne, having touched a nearly five-month peak of 1,969 yuan earlier.

($1 = 6.8869 Chinese yuan)

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