Coal news and updates

Whitehaven Coal says thermal coal prices are likely to remain stable for some time, as wet weather in Indonesia constrains supply and demand from Chinese power generators stays strong.

 

Whitehaven’s upbeat assessment of the seaborne coal market comes after it produced 6 per cent more saleable coal in the 12 months through June, a new record for the company.

 

Still, a switch in focus to a new underground coal seam at the Narrabri mine in eastern Australia meant its saleable coal production of 20.8 million tonnes fell short of an annual target of 21 million tons to 22 million tons.

 

Sydney-based Whitehaven (WHC) said output at Narrabri was held back by mining of the LW106 longwall finishing in late February and the need to wait a few weeks before coal production could start from the LW107 longwall. Since then, however, average weekly production from the new longwall has beaten expectations.

 

Whitehaven said it sold thermal coal at an average price of $US83 a tonne in the three months through June, representing a 4 per cent premium to the benchmark globalCOAL index that assesses prices of coal exported out of the Australian port of Newcastle. Coal from the Maules Creek mine achieved even higher prices, because it generates more energy when burnt and has a lower ash content.

 

The company noted that Chinese power demand in the first four months of 2017 is 8 per cent above a year earlier, while safety checks at mines in the country have supported domestic coal prices. “These higher prices have flowed back into the seaborne market,” Whitehaven said.

 

Demand elsewhere remains steady and wet weather in Indonesia “supports expectations that thermal coal prices will remain in a relatively narrow range around current levels in the near term,” the company added.

 

Whitehaven benefited from metallurgical coal prices spiking after a tropical cyclone left a trail of damage in eastern Australia earlier this year, with damage to rail lines limiting exports for several weeks. In the three months through June, the company achieved an average price of US$106 a ton for the coal used in steelmaking.

 

Management said metallurgical coal prices are now stabilising and should remain around current levels in the near term.

 

Source: The Australian