Australia Coal Rail Service Resuming After Storm Swamped Network

Coal rail services to Australia’s Newcastle port will resume Wednesday after severe weather felled power lines and flooding swamped tracks, damaging the network.

Trains are forecast to start running on the Hunter Valley coal network as early as Wednesday afternoon after a week-long halt, the Australian Rail Track Corp. said in an e-mailed statement April 28. Flood waters have dropped to workable levels as signaling restoration and repairs continue, it said.

Heavy rain and strong winds downed power lines and knocked trees onto the system used by companies including Rio Tinto Group and Glencore Plc to rail coal to Newcastle export port. A global glut and reduced demand from China will probably cap price gains, sparing consumers from a repeat of 2011 when flooding shut mines and drove the cost of the fuel more than 57 percent to a record $136.30 a metric ton.

“It’s a completely different environment now,” Daniel Hynes, a senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Sydney, said by phone. “Until we see a significant pick-up in demand, primarily from China, which has seen import growth fall quite dramatically, there won’t be that rally we saw the last time these disruptions hit.”

Thermal coal at the port of Newcastle in Australia, the fuel’s biggest export harbor, advanced 9.8 percent to $63.83 a ton last week, according to data from Globalcoal. Prices slid 19 percent last month, the most since February 2009.

While loading has resumed at Newcastle, some restrictions are in place for ship movements and additional resources have been allocated for dredging to deal with the loss of depth at the harbor, the port said in an e-mailed statement on Monday. Australian Rail Track announced the suspension of rail services on April 21 and forecast extensive repairs.

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