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Coal sector rebuilding

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Coal sector rebuilding takes longer than forecast
JAMES GLYNN
From:Dow Jones Newswires
September 12, 20113:50PM
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Trucks sit idle at a Curragh coal mine as a levy is built to hold back flood waters in Queensland in December 2010. Picture: Lyndon Mechielsen Source: The Australian
REBUILDING Australia's coal exports after devastating floods earlier in the year is taking longer than expected and could stretch on well into 2012, with mining companies now in a race against time as another tropical storm season looms.
Economists today said the coal industry looks set to be still rebuilding exports in the second quarter of 2012, or later if the summer cyclone season across the country's tropical north brings fresh floods.
Coal is Australia's largest export and the industry has been rebuilding after massive open-cut mines were closed by the flooding at the beginning of the year.
July trade data today showed Australian coal exports fell 12 per cent, or $535 million, compared with June, raising doubts about whether the industry will deliver a spur to economic growth in the second half of the year.
Total exports fell 0.9 per cent in July, while imports fell 0.9 per cent. Australia's trade surplus in the month was a seasonally adjusted $1.83 billion, just below the $1.9bn economists had forecast, but just ahead of the downwardly revised surplus of $1.817bn in June.

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"The return to full production of coal could take quite a long time. We are going to start hitting the wet season once we get to our summer," said Andrew McManus, economist at ANZ.
On current trends, the industry may only be at 85 per cent production by the time the storm season hits. This could delay the return to full output until closer to mid-year, he said.
"The wet season always does bring down capacity each year. The fact that it has taken so long to get back to reasonable production levels, it is going to hurt them a bit," he added.
Trade Minister Craig Emerson said volume shipments from Australia's main coal terminals remained about 12 per cent below their 2010 average in July.
The fall in coal exports in July reflected sharply weaker exports of coking coal to a number of Asian markets, including the major markets of India, South Korea and Japan, said Adam Boyton, chief economist at Deutsche Bank Australia.
While month-to-month volatility in coal exports is common, it raises questions about the strength of economic growth in the second half of 2011, especially against a backdrop of slowing world growth, he said.
"With the evolution in the global economy over the course of 2011 weaker than expected, we will be watching this element of the data closely over coming months to gauge just what impact a softer global environment may be having on both the prices and volumes of Australian exports," MR Boyton said.
Still, the trade outlook isn't too grim for Australia. Weekend data from China showed its imports surprised on the upside, gaining 30 per cent in the year to August, much higher than the previous month's figure of 23 per cent.
"China's prospects mean far more for Australia's outlook than events in the US and Europe," said Annette Beacher, head of Asia-Pacific Research at TD Securities in Singapore.