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The Australia flood could affect the steel industry

A building and surrounding area are reflected by remaining flood waters as night falls in Rockhampton, Australia.

TEXT OF STORY

JEREMY HOBSON: The rains continue in Queensland, Australia. And floods that have affected some 200,000 people continue their path of destruction.

For more on the economic impact, let's bring in Reporter Stuart Cohen in Sydney. Hi Stuart.

STUART COHEN: Hello Jeremy. Nice to talk to you again.

HOBSON: You too, well we're going to get into the international ramifications of this, but first, give us the latest on the floods.

COHEN: Well, the waters have peaked in the city of Rockhampton, which is the last major town in the flood's path. But, to make matters worse, the rain has started falling again. Forecasters are calling for several more days of rain, which could mean fresh floods in places that have already started their clean-up. And, there are also reports now of hazards from poison snakes and crocodiles. They were flushed out of the rivers where they live by the rising flood waters.

HOBSON: And Stuart I gather the economic ramifications are going to go far beyond the borders of Australia?

COHEN: Australia supplies about half of the world's coking coal, which is used in the production of steel. Mark Purvin, who's head of commodities research at the Australia New Zealand Bank says the floods will affect worldwide prices, but it's still too early to know exactly how much.

MARK PURVIN: Well look, it's still early days and I think the problem that we're seeing at the moment is that water levels are still rising. But this looks worse than in 2008, floods we saw a couple of years ago. Now, in terms of pricing, we've seen a mild pick up in coking coal prices. They're at a 10 percent rise over the last month. I think, like we saw two years ago, the market was a little slow to react, and then we saw quite a strong spike in prices.

And that's expected to have an effect on steel prices, which in turn could affect everything from construction to cars.

HOBSON: Reporter Stuart Cohen joining us from Sydney, Australia. Thank you so much.

COHEN: Thank you.

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