Australian rail firm Aurizon has maintained its 210mn-220mn t of coal haulage guidance for the 2020-21 fiscal year to 30 June despite a weak July-September, based on expectations that the current Chinese disruption to Australian coal imports will ease when a new quota is introduced.
Aurizon hauled 50mn t of coal in July-September, down by 5pc on the year and on the quarter. The firm expects railings to increase in the second half of its fiscal year, as China eases restrictions that it put in place to stop Australian coal imports. Aurizon thinks the restrictions are solely to keep 2020 Australian coal imports into China in line with those of 2019 and are not a more structural issue related to trade tensions between Beijing and Canberra.
Beijing earlier this month instructed key steelmakers and power generators to stop buying coal from Australian sources, forcing some ships waiting with Australian coal outside of Chinese ports to be removed from the queue and to resell to alternate buyers. This is likely to result in weaker coal haulage figures for Aurizon in October-December, ahead of more coal being exported from Queensland and New South Wales (NSW) in January-March. This may be disrupted by a more active than average cyclone season, which the Australian bureau of meteorology is predicting because of the La Nina weather pattern in the Pacific Ocean. This is most likely to affect coal shipments from Queensland during the November-April cyclone season, although it could may bring heavier rain to NSW.
Aurizon also expects to see an increase in demand for Australian coking coal from non-Chinese nations, as blast furnaces are restarted following Covid-19 lockdowns.
Aurizon has been hit by closures at some of its major customers, including the bankruptcy of Bounty Coal and closure of its Cook Colliery coking coal mine.
Safety issues at several Queensland mines have also reduced demand for Aurizon's haulage business, including the closure of US energy firm Peabody's North Goonyella coking coal mine following a roof collapse in September 2018. Aurizon has agreed to a 10-year extension of Peabody's haulage contracts to 2030-31 as part of a resolution around the unscheduled closure of North Goonyella. Aurizon also signed a five-year extension of its contract with US coal firm Coronado for haulage of coal from its 12.8mn t/yr Curragh coal mine in Queensland.