Coal news and updates

Thermal coal prices set to rebound, analysts says

ALMOST half of Australia’s thermal coal exports are loss making, but cost cutting measures will boost producers when prices rebound, which could be soon, according to commodity analysts.  
 
Half of all thermal coal exported from Australia is produced at cash costs of more than $US65 a tonne, with some operators potentially making losses of more than $US25 a tonne, commodity analyst group HDR Salva has suggested.

The price of thermal coal is down about 22 per cent on the past year and is sitting at its lowest level since the second half of 2009. At its peak, thermal coal was priced at about $US120 a tonne but it has fallen to about $US66 a tonne for coal shipped through Newcastle.

HDR Salva’s director, Chris Urzaa, outlined that his group had developed a detailed cost curve for 95 Australia coal operations, and despite 18 months of aggressive cost cutting, its analysis demonstrated a significant percentage of thermal coal producers would continue to struggle in the short term.

“While painful right now, the effort to continue improving costs will stand the producers in good stead when attractive coal prices return, and we believe they will soon,” he said.

Despite the current climate, Mr Uzraa said that he expected a surge in new coal fired power capacity coming online throughout Asia over the next five years.

He said that on conservative estimates, the additional coal-fired power plant capacity forecast would require an additional 40 million tonnes of coal supply every year.

“We believe Australian exports will be ideally placed to satisfy this demand, particularly as Indonesia, our major Asian competitor, has significantly slowed its thermal coal supply growth this year,” Mr Uzraa said.

Source: The Australian