Coal news and updates

Whitehaven Coal cuts coal price forecasts, lifts output target

Whitehaven Coal has backed away from its optimistic view it can receive increasing prices for its thermal coal this year, as the price for the commodity shows little sign of recovery.

In its March quarter production report on Friday, Whitehaven said it expects the price to remain around current levels for the rest of the year. The price for thermal coal is down about 11 per cent this year to around $US57 a tonne.

"Chinese demand for imported thermal has fallen during the first three months of this year following the introduction of regulations aimed at supporting domestic coal production in China," the miner said.

"Production cuts are occurring with Glencore announcing a reduction of 15 million tonnes per annum in February and Shenhua cutting 33 million tonnes of Chinese domestic production. Whitehaven expects the thermal price to remain around current levels for the balance of this calendar year."

Whitehaven exports both thermal and coking coal, but is more focused on thermal coal, having shipped 3.2 million tonnes during the March quarter at an average received price of $US65.37 per tonne.

The gloomy outlook from Whitehaven is a departure from its stance in January when it said it expected  "a stable to gradual increase in the price for its thermal coal qualities over the next year".

Its view on the metallurgical coal market, which it formerly suggested was close to returning to balance, is equally glum.

Whitehaven said while over 25 million tonnes of production cuts have been implemented across the global industry, the market has not returned to balance.

Whitehaven said it expects metallurgical coal prices are unlikely to improve until 2016.

Despite depressed market conditions, Whitehaven increased full year production guidance for its Narrabri mine after a strong quarter. The company now expects the mine to produce between 7 million tonnes to 7.2 million tonnes of run of mine coal for the year.

Whitehaven set a new record for total saleable coal production of 4.1 million tonnes for the quarter, up 85 per cent from 2.2 million tonnes a year ago. Total coal sales for the March quarter were 3.7 million tonnes, also a fresh record as tonnes from the company's controversial new Maules Creek mine were included for the first time.

At the end of the March quarter, the project was 93 per cent complete after a long campaign from environmentalists to stop its development. Whitehaven said Maules Creek is likely to be declared commercial from the beginning of July.

Whitehaven reaffirmed it is on target to achieve its previous guidance of reducing costs by a further $1 to $2 a tonne in the current half from the $63 a tonne reported in the first half of the financial year.

source: http://www.smh.com.au