Australia's biggest floods in decades forced more people in rural and mining areas to evacuate on Tuesday, with waters yet to peak in one of the worst affected towns, as the country's commodity-export boom took a hit from coal mine closures.
Floods have submerged or disrupted life across an area the size of France and Germany combined, according to the premier of Queensland state, bringing the nation's biggest coal region to a virtual standstill and pushing world coal prices higher.
"It's so surreal. Like all the carparks are gone. It looks like a beach in some areas," one woman told ABC radio from Rockhampton, a town of 75,000 that is surrounded by water and is virtually sealed off from the rest of the country.
Coal mines with an annual capacity of more than 90 million tonnes are under force majeure, which releases companies from contractual obligations, pushing up long-term pricing for coking and thermal coal.
The capacity affected equals 35 % of Australia's estimated 259 million tonnes of coal exports in 2009. Australia accounts for more than half of global coking coal exports, which are vital to steelmakers, especially in Asian countries such as booming China.
The rains and floods have affected around 200,000 people over the past two weeks, inundating thousands of properties and disrupting the major Gladstone coal port, where ships queued offshore to await coal rail lines to reopen.
Around 500 houses were evacuated in Rockhampton, near the central Queensland coast, with authorities expecting the flood to peak in the town on Wednesday. About 1,000 people made homeless by the floods are living in evacuation centres.
IMPACT ON ECONOMY
The disaster, and its impact on coal and farm exports, is likely to provide more headwinds for the Australian economy, with economists expecting the floodwaters to put a temporary brake on booming commodities exports.
"It's very hard to be precise on this, but as a rough estimate the flood impact on production and demand could shave around 0.4 % points off GDP," said Helen Kevans, an economist at JPMorgan.
That equates to just over A$5 billion of Australia's annual output of A$1.3 trillion, with the impact likely to be spread over the last quarter of 2010 and the first quarter of 2011.
Widespread damage to crops in Queensland is also likely to push up fruit, vegetable and dairy prices, perhaps adding around 0.3 % points to inflation this quarter, Kevans added.
But she expected the economy would take back the slack once the floods receded and recovery began.
"There tends to be a strong rebound in activity following events like this, as you get the boost from insurance
payments, government spending and rebuilding," she added.
Shares in insurers sank on Tuesday, led by Queensland-based Suncorp , on concerns about mounting flood claims. Suncorp has lost about 3 percent in morning trade. Many flood victims will be unable to claim as they live in flood prone areas where residents are unable to get cover.
WHEAT FARMERS ESCAPE WORST
Australia's wheat industry has been mostly spared by the Queensland floods, with that state accounting for less than 5 % of national exports.
But wet weather has still been a blight on the grain harvest further south, in New South Wales state, where many crops have been degraded to feed status because of water damage.
Grain handler GrainCorp said harvest operations were returning to normal in other states as fields dried out.
Grain rail services in Queensland are unlikely to reopen for up to two weeks because of flooding.
Queensland is sparsely populated, with towns often separated by hundreds of km of lonely highway, and so far Queensland police have confirmed the deaths of three people in the latest floods.
South of Rockhampton, furniture and debris could be seen floating in the floodwaters, which are expected to remain high for the next week. Elsewhere, floodwaters were receding and a massive cleanup was under way.
The weather bureau has declared flood warnings for seven river systems in Queensland, with monsoonal rains forecast for the state's tropical north and thunderstorms for the southeast.