Coal news and updates

 

Whitehaven Coal expects the coal price to remain strong through the December quarter following recent settlements in Asian markets, which is helping it to reduce borrowings.

 

The market price for so-called "semi-soft" coking coal, has risen a strong 86 per cent to $US130 a tonne, it said in its latest quarterly report filed with the ASX Monday morning.

 

Despite the opposition, Whitehaven Coal is profiting handsomely from the resurgent coal price.  

The rise for this quality of coal follows the surge in the price being paid for premium coking coal of $US200 a tonne following recent contract settlements.

 

In the September quarter, Whitehaven received $US70 a tonne for sales of semi-soft coking coal and $US64 a tonne for sales of steaming coal, it said. Coking coal is primarily used when making steel, with steaming coal mostly used in electricity generation, with the benefit of the higher price to flow through to shipments this quarter.

 

Whitehaven said the surge in the coal price is underpinned by firm demand, coupled with measures by China to reduce output from inefficient mines along with the decline of exports from some marginal suppliers.

 

In the September quarter, coal sales surged by 12 per cent to 5 million tonnes, it said, with stockpiles declining 3 per cent to 1.67 million tonnes.

 

Optimism over the impact of the coal price rebound has sent the company's shares sharply higher as concerns about the group's high level of debt faded.

 

In the past week alone, its share price has risen by 4.9 per cent, continuing its steady climb thanks to renewed optimism over the outlook for coal prices, even though some analysts were warning late last week the rally in some miners was becoming overheated.

 

"While underlying demand has been strong, the recent higher pricing has been accelerated by the implementation of the Chinese Government policy supply side reform targeting the closure of some high cost, inefficient and environmentally lower quality production capacity from Chinese supply," Whitehaven said.

 

"In addition, supply cuts by both swing seaborne metallurgical and thermal coal producers, weather related production issues in a number of countries and infrastructure constraints in Australia and Columbia have placed further pressure on coal supply.

 

"Whitehaven expects pricing for metallurgical coal products in the December quarter to be significantly higher than September quarter. December quarter settlements for the three main metallurgical coal types have completed. Thermal coal prices are expected to be well supported over the remainder of FY2017. 

 

 

"The rapid rebound in coking coal prices is a timely reminder of the tightness of the market for this key ingredient for steel making," Stanmore Coal managing director Nick Jorss said in a statement.

 

"The coking coal market has been significantly under-invested over recent years in response to low price signals and lacks a pipeline of advanced projects to address the depleting supply of what is essentially a scarce resource."

 

In afternoon trading, New Hope was ahead 4 per cent at $2.01, Whitehaven 3.3 per dent at $2.85 and Stanmore Coal 11 per cent at 83c. Malabar, which has been linked with a purchase in the Hunter Valley gained another 16.7 per cent to 35c.

SOurce: SMH