Rio Tinto and BHP Billiton will report lower coal and iron ore production figures for the March quarter from the previous quarter after flooding and cyclones in Australia disrupted operations, with coal mines still underperforming.
Coal production could be off by as much as 15 percent for the global miners after Queensland state experienced its wettest period on record, while weather difficulties in Western Australia are expected to have reduced quarterly iron ore output by around 5 percent.
Rio releases quarterly production figures on April 13 and BHP on April 20.
UBS calculates that BHP has recorded a 15 percent decline in Queensland coal production alone in the quarter ended March 31, with sales down 30 percent. "The larger hit to sales reflects the absence of stockpiles and the need to rebuild inventory," UBS said in a report.
Iron ore volumes should also be down, UBS said.
Queensland in total lost up to 30 million tonnes of coal output when monsoon rains and a cyclone battered the eastern seaboard between November and February.
"It could have been a pretty tough quarter given the weather impact on both iron ore and coal, particularly in Queensland and Western Australia," said Mark Pervan, head of commodity research at Australia and New Zealand Bank.
Rio and BHP posted record output of iron ore for the December quarter, cashing in on soaring prices of the key steelmaking ingredient that is the biggest money maker for both miners.
Strong demand from top steel producer and iron ore consumer China and tight supplies had pushed up spot iron ore prices to record highs nearing $200 a tonne in mid-February.
Iron ore contract prices had been tipped to rise by 20 percent to an all-time high of $179.2 per tonne in the second quarter, including freight, based on Platts 62 percent price index which is widely used by global miners in setting rates.
This should help drive a swift recovery in Rio and BHP's iron ore production in the current quarter.
"Certainly the first-quarter iron ore drop will be a one-off. It should pick up in the second quarter but coal might take a little longer," said Pervan.
Exports from Australia and Brazil, the world's top two iron ore suppliers, have failed to meet rising demand from China and the gap left by a decline in exports from India, the No. 3 exporter, Morgan Stanley said in a report.
Morgan Stanley, which expects China's iron ore imports to reach a record 745 million tonnes in 2011 as its domestic iron output fails to match demand growth, said tight global supplies should keep the seaborne market in deficit at least until 2013.
China's iron ore imports stood at 177.2 million tonnes in January-March, up 14.4 percent from a year ago.
Coal in Deficit
BHP flagged in January that the Queensland floods will hit sales and production of its coal mining operations for at least six more months after output fell by 30 percent in the December quarter.
BHP is the world's largest supplier of seaborne traded hard coking coal via a joint venture with Japan's Mitsubishi Development. Most of Australia's coking coal, used to make crude steel, comes from Queensland.
Reflecting tight coal supplies, Rio settled its second-quarter hard coking price at $330/tonne and semi-soft coking coal at $264/tonne, beating the previous record set in 2008, according to research by Macquarie Bank.
"Infrastructure problems, especially in Australia, and limited supplies of new premium hard coking coal at a time when new large-scale blast furnaces require greater quantities of this material, will likely intensify pressure on an already tight market," Morgan Stanley said.
"We forecast deficit seaborne markets until 2016, when supply from new metallurgical coal basins in Mongolia, Mozambique and Russia should balance the market once again."
In copper, UBS is looking for output from the giant Escondida mine in Chile to drop off, with BHP maintaining its guidance of a 5-10 percent decline year-on-year in fiscal 2011.
BHP owns 57.5 percent of Escondida and Rio holds 30 percent.