While record annual benchmarks of $US129.85 a tonne free-on-board were recently struck by Australian thermal coal producers in Japan, lower volumes are expected to be shipped than in previous years.

In late March ANZ estimated that around 10% of Japan’s total power generation, including nuclear and thermal coal-fired electricity, was knocked out by the major earthquake and tsunami.

Coal and Allied has already signalled that it will try to compensate for any longer term reductions of volume to Japan by increasing exports to China, North Korea and Taiwan, while targeting markets in India and Vietnam.

According to the Hunter Valley Coal Chain Coordinator the vessel queue off Newcastle was just nine ships as of midnight, a far cry from the queue of 60 vessels before Christmas.

Last week HVCC forecast the queue would be 11 at the end of May.

The plunge in vessel queues not only follows a strong run in ex Newcastle thermal coal prices and natural disasters in Japan and Queensland, but also comes after production has been suspended at Xstrata’s Blakefield South and Ulan mines in the Upper Hunter Valley.

While the Blakefield South mine could remain suspended for some time yet, Xstrata can make up at least some of this shortfall through production at the associated Beltana mine.

Efforts were underway to restart production at the Ulan longwall mine just before Easter.

Production at the mine was halted in February as large volumes of water seeped underground following torrential rainfall.

ILN is seeking an update from Xstrata on progress to return the mine to production.