A number of factors came together to ease prices this week, with Newcastle spot FOB prices falling 3.4% off record highs of $134 per tonne and Richards Bay spot prices easing 2.8%.

ANZ said there have been reports out of China that it has cut 2008 coal export quotas to 40 million tonnes – a large drop from the 70Mt last year.

Over the next few weeks Indonesia is expecting more sunshine than monsoon and the improved weather may lift shipping volumes as sea conditions become negotiable. Newcastle port volumes may also ease with fewer vessels arriving, ANZ said.

The situation in South Africa is offering little supply clarity, with increased demand from state electricity producer Eskom taking up much of the supply with the situation looking to remain in the near term.

ANZ said the constrained supply chain in Australia and high demand from Asia would likely keep a high floor on prices.

The recent floods across Queensland are expected to result in production losses of 10–15Mt. Already this week BHP Billiton Mitsubishi Alliance (BMA) has predicted losses of 6.5–7.5Mt from its operations.

“Australian supply will need to be the swing supply, but headaches over transport infrastructure will continue to keep the supply response muted," ANZ said.