Japanese tsunami to affect APAC thermal coal producers

Rating agency Standard and Poor's today said thermal coal producers in Asia Pacific (APAC) are likely to feel some short-term financial impact from Japan's recent earthquake and tsunami.

"Producers may find it difficult to deliver contracted coal to Japan, and prices will probably fall in the region due to oversupply. The situation could stabilise within a few months, however, as demand and prices for thermal coal pick up," the rating agency said in a statement.

The earthquake in northeastern Japan crippled about a tenth of the country's electricity generation capacity, particularly for nuclear and thermal power.

"For the next three to four months, thermal coal exporters can expect their sales volumes to Japan to drop 10-15 per cent. But this will be only a temporary decline," Standard & Poor's Credit Analyst Suzanne Smith said.

"Despite a short-term negative impact on coal producers, the earthquake isn't a significant negative credit factor," Smith added.

Japan is the world's largest importer of thermal coal. It imported more than 100 tonne of the commodity in 2010. Indonesia, Australia, and Russia are the top thermal coal suppliers to Japan, it said.