Another disaster, another commodity price skyrockets

It seems like we hear about another record commodity price on a daily basis. Yesterday alone, we read about world record oil prices and a ten-fold increase in potash prices, which are helping drive up food costs. The interconnectedness of the global economy has never been more evident than in the past months.

Now, it appears the costs of cars, washing machines and anything else made with steel, are going up because January floods in Australia affected the Bowen Basin area that produces 40% of the world’s steel-making coking coal. [above: Ensham Resources Pty. mine site submerged in flood waters in Queensland, Australia, Jan. 22, 2008. Credit: Ensham Resources Pty]

Japanese steel makers are paying $300 per ton of coal from the Bowen Basin, a 300% increase, according to a report in Bloomberg.com. Toyota has announced price increases for some North American model cars as a result of the steel cost.

Coking coal prices may continue to rise into next year because the Australian damage is so widespread.