Australian east coast is hit by a severe weather driven flood, moving from Queensland down to New South Wales.

Last time Australia was hit by a “once in a century” flooding was in 2011. Back then, the flooding damaged coal infrastructure such as mines and rails, with negative impacts on coal supply lasting for many months, whereby 75% of the coal miners had to halt exports and export as the mines were taken out of operation.

We have not seen any news yet pointing at impacts on Australian coal supply. However, yesterday the futures market spiked to new all-time highs, and we suspect the flooding was an important price driver.

Australia exports account for ~17% of total dry bulk ton-mile demand, of which, one third is related to coal exports.

Should the flood have a similar effect as seen in 2011, we expect it to have a negative impact on the dry-bulk market, as full replenishment of the volumes seems difficult to achieve and Indonesia, which might offset some of the lost volumes, has a lower sailing leg into China.