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Wednesday 18

October, 2017 4:01 AM



Whitehaven Coal's output and sales rise

Whitehaven Coal's output and sales rise

Coal miner Whitehaven has lifted its production and sales, but its prices have disappointed the market.

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By AAP 12.10.2017 04:24 PM

Whitehaven Coal achieved a solid lift in production and sales in the September quarter, helped by higher output from its mines and strong demand.

However, the prices realised by the company during the quarter were lower than market expectations, sending its shares lower.

The east coast miner's production in the three months to September 30 was up 14 per cent from a year earlier at 5.87 million tonnes of saleable coal, as demand from its Asian customers remained strong.

Sales in the quarter jumped 21 per cent to 6.08 million tonnes.

Whitehaven exports most of its 21-million-tonne annual output to countries including Japan, China, South Korea, Taiwan and India, where it is used in new-generation coal-fired power plants.

The company has benefited from a dramatic rise in coal prices over the past year on the back of supply cuts in Asia, and weather disruptions such as Cyclone Debbie on Australia's east coast as well as wet weather in Indonesia.

It realised an average price of $US109 per tonne of metallurgical coal during the September quarter, almost the same as the $US106 a tonne it received during the preceding three months.

For thermal coal, its main export, the average realised price was $US94 per tonne, up from $US83 per tonne in the June quarter.

Given the strength in prices during the September quarter, UBS analysts had expected the company to realise an average of around $US115 per tonne for metallurgical coal, and earn a premium on the Newcastle thermal coal benchmark that averaged $US92 a tonne.

The lower than estimated numbers clearly disappointed the market, with Whitehaven shares dropping 11 cents, or 2.8 per cent, to $3.77.

The miner said it expects prices to remain strong given rising demand for its higher quality coal because of a greater focus on environmental and generation efficiency, particularly in China.

At the same time, both Australia and Indonesia have been unable to respond to the strong demand because of weather-related constraints.

"This background underpins a positive outlook for thermal coal demand and prices over the next year," it said.

However, metallurgical coal prices could moderate over the next six to 12 months if if steel production in China is cut during the winter months, Whitehaven added.

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