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Rains in Australia Make Steel Producers Worried Over Coal Supply

October 11, 2011 at 21:36 by Vladimir Vyun

Forecasters predict coal may surge to a record on prospects of heavy rains in Australia.

The Australian Bureau of Meteorology estimated the chance for above-average precipitation in Northern Queensland to be 65 to 70 percent. The previous La Nina, which was the most expensive natural disaster for Australia, spurred coal prices to $330 per ton. Forecasters expect rainfall to weaker than the record rains in the previous season, but it’s still remains a reason to worry.

Producers of steel have a particular reason to worry as there is deficit of coal reserves at steel mills. Every ton of crude steel requires about 600 kilograms of coking coal.

Some analysts think that in case of disruption of coal supply prices may jump as high as $350 per metric ton.

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