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Cyclone Debbie & Coking Coal

On March 28th around noon (local time Queensland; March 27th 9 pm EST), Cyclone Debbie is forecasted to reach land as a category four cyclone – the strongest in storm in six years. The minor coal export terminal of Abbott Point (approx. 28 mm MT/yr) is near Bowen and is directly in the cyclone’s path. Earlier forecasts had the cyclone’s path hitting Bowen, but continuing west and mostly missing the northern coalfields of the Bowen Basin. The most recent forecast (see below) still has the cyclone hitting Bowen and has now extended to the northern and center portions of the Bowen Basin, as well as two of the three major coal export terminals (Dalrymple Bay, approx. 69 mm MT/yr; Hay Point, approx. 49 mm MT/yr). As Cyclone Debbie moves inland, the storm system weakens to a Category 1 and then an atmospheric low system that veers south and then southeast alongside the coalfields of Northern & Central Queensland, which could extend by a few days the rain which will likely fall in the coalfields. Will Cyclone Debbie turn into the ‘Big Wet III’, replicating the market impact of 2008 and 2011, which catapulted coking coal prices above $300/MT? It is too early to know, but in this report, I will include some things to think about. [To read the full article, please click on the tab]