Queensland floods - Impact on Global Commodity Markets
“Mining and agriculture - Queensland’s top export industries”
...of Australia’s economy
GDP rise in 2010-11
...of global coking coal exports
...of Australia’s fruit and vegetable production
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Summary Australia is suffering from the severe economic impact of the worst floods in Queensland in almost 40 years. Its coal exports have been especially hit hard. Australia is the world’s largest coal exporter; it accounts for about 56% of global coal exports. Almost a third of the world’s coking coal comes from the Bowen Basin in Queensland. The torrential rains affected about 30,000 properties in Queensland. They led to the closure of coal mines, disrupted rail transportation, damaged crops, and slowed industrial output. Flooding in Queensland The eastern states of Australia witnessed heavy rainfall during H2 2010 and early 2011 due to the development of a La Nina weather pattern and Cyclone Tasha in December. Queensland, including Brisbane, was most affected, although there was flooding in parts of Victoria and New South Wales as well. However, Australia’s GDP is expected to rise during Q2 2011 due to rebuilding. Economists at Bank of America/Merrill Lynch (BoAML) have reduced their 2011 GDP growth forecast to 3.3% from 3.0% and hiked their CPI forecast to 3.5% from 3.1%.
As a result of the recent cyclone and oods, there could be a fall of 7,000 million dollars worth of coal and agricultural product exports.
According to the latest labor reports released by the Australia Bureau of Statistics, 24,000 jobs were created in the month of January 2011. In Queensland, the jobless rate fell to 5.6% in January from 6% in December 2010. “This is a pretty healthy labor market and it’s getting tighter and we are getting pretty close to full employment,” said Senior Economist Su Lin Ong of RBC Capital Markets.
Impact on Commodities Mining 4 he recent flooding in Eastern Australia is expected 4 he northeastern region produces about 80% of the T T to reduce agriculture production by USD 500-600 country’s coking coal. million metric tons this year. The production of 4 he areas affected by floods account for 40-45% of T vegetables, fruits, cotton, grain sorghum, and some global exports of coking coal, which is the key raw winter crops as likely to be severely affected. material for steel making. 4 he floods swamped the mines in the state of T 4 he prices of coking coal increased as the result of T Queensland, halting operations that produce 35% the disruption and are expected to average about of Australia’s estimated 259 million metric tons of USD 260 per metric ton in 2011. exportable coal. The floods severely affected the coal mining industry Economic Impact and have impacted about 40 mines in Queensland. Most Commodities make up a large part of Australia’s companies declared force majeure on contracts, as the USD 1 trillion economy. Queensland accounts for floods forced them to halt production and resulted in approximately 19% of Australia’s economic output. logistical problems. It is estimated that this disruption The floods devastated huge areas of the country, which could remove over 5% of coking coal from the global may take many years to rebuild and is likely to have a market this year. significant impact on the economy. It is estimated that the cost of cleanup and rebuilding will total as much as USD 19.7 billion. “The reconstruction effort is looking set to be larger and larger and could make a significant contribution to growth as early as the second quarter,” said Michael Workman, senior economist at Commonwealth Bank.
Australia’s GDP is expected to grow at 4.25% this year. However, its GDP is projected to contract by about 1% in the current quarter because of weather damage...