China, the world`s biggest coking coal importer, is scrambling to cover Australian supply disruptions after Cyclone Debbie knocked out mines and rails by turning to an unusual source: the United States.
Debbie, which hit Australia`s Queensland state last week, caused the evacuation of several mines and damaged coal trains supplying export terminals, triggering two miners - Yancoal Australia and QCoal - to declare force majeure on its deliveries. With other miners like BHP Billiton and Glencore also affected by the storm`s fallout, more disruptions may follow.
Force majeure is a commercial term that means a buyer or seller cannot fulfill their obligations because of outside forces. It is typically invoked after natural disasters or accidents.
Australia is the world`s biggest coking coal exporter and is China`s largest supplier. With markets there closed on Monday and Tuesday, its steel makers are clambering to find alternative supplies.
"Markets may be closed Monday and Tuesday but there`s certainly activity. The Chinese are fixing cargoes from the United States in order to replace the shortfall from Australia," one coal trader with knowledge of the matter said, speaking on the condition of anonymity as he was not cleared to talk about commercial deals.
"More will make its way from the U.S. to China very soon," he said.
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