Australian coal producers bearing brunt of Chinese cuts, Whitehaven says
Falls in coal prices could moderate but Australian producers are bearing the brunt of Chinese cuts, Whitehaven says.
Falls in the thermal coal price could moderate as high-cost producers are forced from the market, according to Whitehaven Coal, which has seen prices for its energy coal fall 25 per cent over the last year.
The company said that, while metallurgical prices were still holding up well, Australian producers had borne the brunt of cuts in Chinese imports of thermal coal, with the market for the product also undermined by tumbling gas prices.
Whitehaven has paid an average $US113 a tonne for its thermal coal in the September quarter last year, and $US84/t in the three months to the end of June, although the company said it is still seeing strong demand for its product.
Despite power use in China growing in the first half the year, Whitehaven said China cut imports on that back of growing domestic production.
“Coal fired power generation increased in central and western parts of China and declined in the coastal regions. With growing domestic coal production, up 3.5 per cent year on year to May and reduced demand from the coastal regions, coal imports declined. Australia appears to have borne the brunt of the lower imports with sales into China falling in the first half of 2019,” the company said in its quarterly production report.
“With the softening of prices in the first half of 2019 the market is expected to rebalance as high cost producers moderate production. Exports from swing producers in the United States and Colombia have declined given the price environment.”
The company sold 4.4 million tonnes of its own coal in the quarter, 12 per cent more than the same period last year, and 5.4 million tonnes of coal from the mines it manages.
Whitehaven received an average $US107/t for its metallurgical coal, which make up on 16 per cent of the company’s coal sales, down from $US128/t in the September quarter last year.
Whitehaven shares were up 16c, or 4.4 per cent, to $3.81 at midday.