Asciano sees rise in coal-haulage demand
After a large drop in coal-haulage volumes earlier this year, Australia's second largest listed rail company, Asciano, has experienced a solid pick-up over the last two months in demand in its key state of Queensland.
But it is still warning that extreme volatility makes it nigh on impossible to give even short-term forecasts.
Asciano's chief executive, John Mullen, said today that the company had noticed a strong improvement in demand for coal haulage in Queensland, its biggest market, in the last two months.
‘‘[But] it is extraordinarily difficult to predict at the moment ... Queensland has been running at 30 per cent below where we should have seen it, and then suddenly we get a month that's a record," he said. "It makes planning capacity difficult."
Mr Mullen said it was a challenge to plan when even Asciano's large customers did not have a firm grip on the short-term outlook.
‘‘Into the first quarter of this financial year it became much more erratic. As a nation we talk ourselves into it so quickly. We have had investors saying, 'has Australia stopped exporting coal'," he said.
David Irwin, the head of Asciano's Pacific National Coal division, said the improvement in demand seemed to be due to a "slight turn in the market and there has been a little more buying opportunity going on".
"It's pretty common across all of the producers that their level of production and sales is going up. We can see that's probably there for at least two or three months [but] we are looking to understand whether it something that is more sustainable," he said. "It is positive ... and we hope it continues."
The rail operations in Queensland had experienced a drop of up to 30 per cent earlier this year in coal volumes. But in a sign of the extreme volatility, Pacific National hauled record volumes of coal from mines to port terminals at Mackay in November. "It shows you how quickly some of these things can swing around," Mr Irwin said.
Asciano is vying with Aurizon, the rail company formerly known as QR National, for contracts up for grabs to haul about 65 million tonnes of coal over the next two years for the BHP Mitsubishi Alliance.
Mr Irwin said it was keen to win a chunk of the new work from BMA but "we are not going to go and win business at any cost".
About 80 per cent of the 230 million tonnes of coal Pacific National hauls in Queensland annually is metallurgical coal, which is used in steel making.
The Asciano executives were speaking at the opening of a $110 million train maintenance facility at Greta in the Hunter Valley in NSW.
The so-called "pit stop" for trains and wagons at Greta will mean that significantly less maintenance will have to be done at Newcastle, which will go some way to help reduce congestion on rail lines around the city's coal-export port.
Asciano's large port operations have also experienced similar swings in demand since July with weak months followed by record throughput at some of its container terminals.
In comparison, volumes across its ports business was steady for the vast majority of last financial year.
Despite a positive end to the calendar year at its container terminals, Mr Mullen said the industry was concerned because shipping lines were talking of canceling sailings next year.