Whitehaven Coal, Coronado Global report June quarter coal price falls
Prices received by major Australian coal producers slumped in the June quarter as the coronavirus crisis hit home.
Whitehaven Coal says the prices it received for its Australian coal sales held up well against plunging price benchmarks, with the company winning a premium for its thermal coal in the June quarter.
The company finished the financial year in a production rush, allowing Whitehaven to meet its revised annual production guidance despite a grim start to the year, when bushfires and drought hit the company’s NSW mines hard.
Whitehaven said on Tuesday it received an average $US59 a tonne for thermal coal sales from its Australian mines, against a Newcastle benchmark price averaging $US55 in the period. It received $US76 a tonne for its metallurgical coal, a 20 per cent premium over spot prices but 20 per cent below the JSM Quarterly benchmark index — slightly more than the 18 per cent discount it received in the March quarter.
Managing director Paul Flynn told analysts on Tuesday the decision of some of the company’s Indian steel mill customers to defer delivery of some shipments of pulverised coal injection product — a form of lower-grade coking coal — had allowed Whitehaven to sell it into thermal coal markets as a high-grade product, improving its overall thermal coal pricing for the quarter.
However, prices for both its metallurgical and thermal coal fell sharply in the period, as the coronavirus crisis hit demand for both products.
In the March period Whitehaven received $US68 a tonne for its thermal coal, in line with benchmark prices, and $US85 a tonne for its coking coal products.
Whitehaven said its equity coal sales lifted strongly in the period, after its March quarter was hit badly by bushfires, drought and problems finding staff for its Maules Creek operations. Equity coal sales lifted to 4.7 million tonnes, up 16 per cent on the June period in 2019, and well above the 3.7 million tonnes sold in the March quarter.
Managed run of mine coal production also lifted, from 4.9 million tonnes in the March quarter to 8.2 million tonnes. Saleable coal output of 6.2 million tonnes was up from 4.1 million tonnes.
Whitehaven said that uncertainty around China’s import quotas for Australian coal weighed on prices in the period, despite record imports into the industrial powerhouse in the June quarter.
The company said the coronavirus had a substantial impact on metallurgical coal prices as key steelmaking customers in India and northeast Asia were forced to cut steel production in response to slowing economic activity and COVID-19 lockdowns.
“The (Newcastle thermal) May and June prices (expressed in Australian dollar terms) are in the lowest decile of pricing in the history of the index since 2008,” Whitehaven said.
“Supply side response to these historically low prices emerged during the quarter from USA, Canadian and Colombian exporters and responses have grown in recent weeks, notably from Indonesian producers and some Australian producers.”
Coronado hit
Production at US and Australian coal producer Coronado Global slumped in the June period as the company idled its US mines in the face of falling prices and the coronavirus crisis.
June quarter sales fell 14.7 per cent on the previous period, to 3.8 million tonnes, after Coronado temporarily idled its Buchanan and Logan operations in the US — both returned to production in May — and put its Greenbrier mine into mothballs until the metallurgical price recovers.
The company’s run-of-mine production fell 27.2 per cent to 5 million tonnes, with saleable production in the period down 22.1 per cent to 3.5 million tonnes.
Coronado boss Gerry Spindler said the performance of its Australian Curragh operations improved in the period, with the mine producing 3.5 million tonnes of saleable coal, up 11 per cent.
But the price Coronado received for its product plunged in the period, with the average price of its Australian metallurgical coal down 23.6 per cent at $US91.90 a tonne, well short of the $US120.30 in March.
Whitehaven closed up 6c, or 4.1 per cent, to $1.52 on Tuesday, with Coronado down 5c at 91c.
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