Coal news and updates

Coal prices falling

After a brief rally, the international spot price for coking coal is falling again.

The price yesterday was US$85.25 a tonne. It was US$87.75/tonne a week ago and US$89.10/tonne the previous week.

Commentators are blaming the fall on the continuing weakness in steel pricing and demand.

Solid Energy receives more than the spot price for its Stockton coal, but the spot price sets the trend for future contracts. Whether the Buller mine survives or is mothballed depends largely on international coal prices.

The price dropped to an 11-year low of US$82.90 in April, then began inching up. It made its biggest weekly comeback in a year in May, jumping US$4.25/tonne in a week, to US$88/tonne.

The rally fizzled out last month at US$89.95/tonne - still well below a year ago, when the price was US$120/tonne, and a fraction of the peak price of US$330/tonne in 2011.

Solid Energy is believed to have settled at around US$93/tonne for its latest July-September Stockton coking coal contracts.

The company told New Zealand Parliament's finance and expenditure committee in March that its breakeven price was US$120-130/tonne. That was before Solid Energy reduced its costs further by cutting 166 jobs at Stockton.

Announcing the job cuts in May, chief executive Dan Clifford said coal prices would determine whether Stockton was still operating in six to 12 months' time.

"We can't hang on forever. If the price continues to decline we will get to the inevitable position where we will need to park the site up."

At the time the price was US$83/tonne.

Solid Energy this week confirmed more West Coast redundancies. The company said it planned to cut eight more jobs across four of its West Coast operations: at Reddale Mine, Strongman Mine (currently in care and maintenance), the Reefton Distribution Centre, and coal washeries at Burkes Creek and Rocky Creek.

source: http://www.odt.co.nz