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New Hope Corp (ASX:NHC) is confident Aussie thermal coal prices have found a floor as they converge with low energy coal pricing in China.

The New South Wales and Queensland focused coal digger saw underlying EBITDA fall 26.5% in the January quarter to $179.9 million on lower prices, with underlying EBITDA some 59.1% down for the first half to $424.8m.

NHC’s earnings eclipsed $1b as prices raged in the first half of FY23 following Russia’s invasion of Ukraine.

But two mild Northern winters have seen demand for thermal coal slide. First half saleable coal output from New Hope’s Bengalla in the Hunter, plus early tonnes from its New Acland mine in Queensland, came to 2.049Mt for the quarter and 4.093Mt for the half year, the latter number up 29% YoY.

But pricing slid from $211.40/t in the October term to just $180.64/t in January. That came as the GlobalCoal Newcastle benchmark dropped 10.6% to US$132.41/t, 64.2% down on the extraordinary prices seen at the same time a year prior.

However, New Hope says the convergence of 6000kcal Newcastle quality coal with lower quality ‘API-5’ pricing would support Aussie exports, with Bengalla capable of also switching between the two grades.

“A mild winter in the Northern Hemisphere has resulted in soft demand, placing downward pressure on coal prices,” NHC said in its quarterly report.

“High energy products have seen greater demand destruction compared to the API-5 price which has remained stable due to strong Chinese demand for lower energy coal supply.

“API-5 has created a floor for the gC NEWC and the expectation is that prices will stabilise at current levels. Bengalla Mine has the capability to alternate production between gC NEWC and API-5 with relative ease and we continue to optimise production and sales based on the margin rank determined from the changing pricing indices.”