SYDNEY, Jan 10 (Reuters) - Coal exports from Australia's Queensland state, one of the world's biggest suppliers to China, hit record levels for the third year in a row in 2016, data released on Tuesday showed.
The state's coal shipments, representing around 60 percent of Australia's coal exports, reached 221 million tonnes last year, eclipsing 2015's record by 1 million tonnes, according to the Queensland Resources Council lobby group.
Some 75 percent of Queensland's coal is metallurgical and used to make steel. The rest is thermal coal and used to generate power.
The state's biggest producer of metallurgical coal, BHP Billiton BHP.AX BLT.L , is expected to show a year-on-year rise of 5.8 percent in December quarterly production, according to RBC Capital Markets. The company will report its results on Jan. 25.
Production restrictions in China along with mine disruptions in Australia lifted metallurgical coal prices to a half-decade high of $311 a tonne in November. But since mid-December, the price has contracted by more than a third, with traders blaming weaker sales in China and India.
Metallurgical coal prices are forecast to average $186.30 a tonne in 2017, before declining further to average $108.80 a tonne the following year, Australia's chief commodities forecaster, the Department of Industry, Innovation and Science, said on Monday. coal prices will continue to contract over the next year as the markets move into better balance," the department's chief economist, Mark Cully, told Reuters.
The retreat in spot prices could give Japanese steel mills a greater hand in negotiating March quarterly contract prices with Australian suppliers BHP, Glencore (LON:GLEN), Peabody Energy Corp and Anglo American (LON:AAL).
Peabody and Nippon Steel 5401.T set the fourth quarter contract at $200 a tonne, twice the price in the previous quarter.