Spot metallurgical coal is heading for a record after surging above $300 a metric ton amid supply curbs from Australia, the world’s biggest exporter of the commodity used to make steel.

Morgan Stanley says “panic buying” has helped double the price of premium hard coking coal over the past eight sessions after rain from the remnants of cyclone Debbie flooded rail lines and halted deliveries to export ports. Prices were unchanged at $300.30 a ton on Tuesday, near a record $308.80 reached in November after China cut production to reduce overcapacity.

While three of the four closed rail networks are scheduled to reopen this week, the major Goonyella line that feeds the export terminals of Hay Point and Dalrymple Bay is forecast to remain closed until about May 8, according to freight company Aurizon Holdings Ltd. Exports from Queensland account for 58 percent of the global seaborne market, according to Deutsche Bank AG.

“We expect this spike event to pass within weeks, with all prices returning to pre-cyclone levels as rail lines are reactivated,” Morgan Stanley analysts including Tom Price wrote in a note dated April 10. “Given the massive scale of this latest rally, we once again see upside risk” to metallurgical coal quarterly contract price forecasts, they said.

Spot hard coking coal advanced $17.20 on Monday to close above $300 a ton for the first time since December, according to The Steel Index. Contracts, which are typically finalized the month before the start of a new quarter, may be settled at as high as $250 for the three months starting April, according to AME Group. Morgan Stanley predicts a second-quarter price of $180, compared with $285 the previous quarter.

BHP Billiton Ltd., the operator of Hay Point terminal, is looking at options to transport coal from mines while the rail network is being repaired, a spokesman said by email on Tuesday. The company will provide details on the impact to production in its next operational review, he said. The next review is scheduled for April 26, according to BHP’s website.

Source: Bloomberg