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Australia Floods Fuel Rise in Coal Prices

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Good evening, I'm Lisa Oake and you're watching "Asia Market Daily."

The floods in Australia's north east are having huge repercussions around the world.

The state of Queensland produces about half of the country's coal exports.

Most of the coal in the state is Met Coal, which is used for making steel. But some of it is also thermal coal, which is used in power plants.

South African miner Anglo-American - the second biggest exporter of Met coal from Australia - says it will take weeks to pump water out of its flooded mines.

The shortage has seen the price of steelmaking coal soar 10 percent on the spot market, which analysts say will put considerable stain on Chinese and Japanese steel mills.

(SOT) Helen Lau, Senior Analyst at UOB Kay Hian:

“For the medium term concern for steel mills is in the second quarter, or after this month, there will be shortage of coking coal shipments from Australia, and higher coking coal prices going forward. So then the steel mills have no way to solve this situation, because coking coal is the fuel that they use to produce steel. So that's why I think the cost pressure for steel mills is still huge.”

And the issue isn't expected to be resolved quickly. Helen Lau of UOB expects the flood crisis to push up prices of steelmaking coal for the next couple of months.

(SOT) Helen Lau, Senior Analyst at UOB Kay Hian:

"I think it certainly would take several weeks for all of these coal mines to resume production. So that's why I think in the coming 6-8 weeks we expect the coking coal price to hit higher above, sorry to hit about 260 form the current level of 230. For China they can import from Mongolia, and so far Mongolia's coal mines have ramped up their production, probably Mongolia can increase export of coking coal to China, so maybe, so compared to Japan, China is less affected. But overall the cost pressure across the region is still high.”

Thanks for watching “Asia Market Daily”.

I'm Lisa Oake from CNBC.

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