WITH more than half of the world's traded market of coal leaving central Queensland, the coal price spike has a huge influence on Gladstone's industry.
Last week the hard coking coal price rose to $US307.20 a tonne, its highest in five years.
Gladstone Ports Corporation chairperson Leo Zussino said it had been a tumultuous year, with the coal price dropping to concerning levels, before rising back up.
The latest price spike has been driven by Chinese supply.
"The consensus is that prices will remain high during the first quarter of 2017 but should then fall dramatically as the high coal price is forcing even the best steel makers such as Nippon Steel into a loss making financial position," Mr Zussino said.
"The main reaction from the steel mills is to dramatically reduce their use of the high priced premium coking coals and replace it with a greater mix of the significantly lower priced semi soft coking coal and PCI coals."
Mr Zussino said there could be repercussions from the price spike with some steel markers considering opting for cheaper options.
"It has been suggested by some steel makers that China has two motives," he said. "China has advised it wishes to remove 100 (million tonnes per annum) of steel production and is looking for the high coal price to force closure of uncompetitive steel mills."
The soaring price is a boost to the Gladstone Ports Corporation, which had 72.1 million tonnes of coal traded through last 2015/16 financial year.
"Central Queensland controls almost 60 percent of the world's traded market for metallurgical coal which is used to made steel," Mr Zussino said.
"No other sector of Queensland's economy has such a dominant position within a highly valued world traded market.
"As such the price of met (coking) coal has an important bearing on the central Queensland and Queensland economy."
A Gladstone Ports Corporation spokesperson said an increase in tonnages would depend on the coal industry demand.
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