Whitehaven Misses Coal Production Guidance
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Whitehaven Coal disappointed the market yesterday with a flat final quarter which left annual production for 2016-17 of 20.8 million tonnes of saleable coal just short of guidance.
Whitehaven’s June quarter and financial year production and sales report, (http://www.whitehavennews.com.au/wp-content/uploads/2017/07/June-2017-Quarter-Report.pdf) revealed the total for the year was short of full-year production guidance of 21 million to 22 million tonnes for the year ended June 30.
Sales for the quarter rose 6% to 5.477 million tonnes, but the company said this was below expectation after slower-than-anticipated recovery from planned rail line maintenance and some port congestion in June.
“Indonesian supply continues to be impacted by weather-related delays, which supports expectations that thermal coal prices will remain in a relatively narrow range around current levels in the near term,” the company said.
Coal exporters saw a temporary spike in the prices of and coking coal and thermal, which peaked in early April at $US314 a tonne and $US89 a tonne respectively, thanks to the impact of Cyclone Debbie in Queensland’s central coal fields.
But prices quickly slumped to finish the 4th quarter unchanged from the start.
Whitehaven slumped to a nine-month low in May as prices fell before staging a modest rebound in June on the better coking coal prices.
The shares fell to a day’s low of $2.75 yesterday before rebounding to end at $2.88, down half a per cent.
“Thermal coal prices declined into May and have since rallied as demand from power generators in China increased,” The company said yesterday in an outlook comment.
"Power demand was up by 8% YOY in the first four months of this year and stringent safety checks at many mines in China have combined to support higher domestic coal prices. These higher prices have flowed back into the seaborne market.
"Demand in other key seaborne markets remains steady and Indonesian supply continues to be impacted by weather related delays, which supports expectations that thermal coal prices will remain in a relatively narrow range around current levels in the near term.
"Spot metallurgical coal prices are now stabilising and should remain around current levels in the near term. If maintained into the future, the changes to the quarterly benchmark pricing methodology will result in closer correlation between quarterly benchmark and spot index prices.”
The company said it expects to sell about 1 million tonnes of metallurgical coal in the September quarter. It did not give an outlook for thermal coal sales.
“As expected Maules Creek established new production records for the June quarter and the full year. Run of mine coal production from the mine in the two periods was 2.764Mt and 9.729Mt respectively. Production for the two periods was significantly above the previous corresponding periods as the ramp up of production progressed. The mine operated at 10.5Mtpa for the second half of the year following the deployment of additional equipment late in the first half of the year.
"The next step up in production will occur in early FY2019 when additional mining equipment is to be added to the fleet. As a result production for FY2018 is forecast to be 10.5Mt ROM coal. Mining below the Braymont seam commenced during the quarter which will enable access to the lower seams in the deposit later this year. The coking properties of the coal in these seams are expected to be better than in the upper seams improving the overall quality of the metallurgical coal produced by the mine,” directors added.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.