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Coal cost soars in supply 'apocalypse'

Flooding in Queensland's Bowen Basin has resulted in a "supply apocalypse" for coking coal, with contract prices likely to hit $US300 per tonne - three times the price in 2007 - as steel mills scramble for the key ingredient. Flooding in the Bowen Basin has taken about 15 million tonnes of coking coal out of the market, as infrastructure limitations restricts the ability of producers to make up the lost output. "There is now an obvious scramble for supply with industry sources confirming that Asian steel mills are begging for tons at close to any cost." The Bowen Basin is the world's single largest resource of exported high quality coking coal. Tight supply has been exacerbated by China withdrawing from coking coal exports, as internal demand soars and coke stockpiles decline to historically low levels. Prices for coking coal and thermal coal, used as fuel for power stations, may rise by 30 per cent more than forecast this year after the flooding and severe snowstorms in China which have restricted supply.

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