We had better than expected news from two mid level miners in Whitehaven Coal (WHC) and Oz Minerals (OZL) in their June quarter production reports released yesterday to the ASX.
Whitehaven reported better than expected coal sales and some optimism about a small rise in some coal prices later in the year and as a result, the shares rose more than 5% to $1.55.
Whitehaven said it expects a slight improvement in metallurgical coal prices in late 2014 thanks to supply cuts by other producers, but it also sees thermal coal markets remaining oversupplied over the next six months. Which is a bit optimistic as other companies and analysts see thermal coal markets being oversupplied for years to come.
Whitehaven said in its June quarter production report yesterday that around 19 million tonnes a year of metallurgical coal output (much of it soft coking coal from NSW and Queensland mines) had been cut so far and further cuts were likely in the near term.
“This should lead to a modest recovery in prices towards the end of this calendar year,” the company said.
Whitehaven expects prices for its metallurgical coal in the September quarter to be in the range of $US91-$92 per tonne, down from $US93.63 a tonne in the June quarter, but then rising in the final quarter of this year.
The company said it sold 22% more coal this year than last year and reached record production levels in 2013-14.
WHC 1Y – Whitehaven lifts production
Full year sales were 10.84 million tonnes, about 2% higher than in 2012-13 (most of it lower priced thermal coal) and included just on two million tonnes of metallurgical (coking) coal.
Total coal sales for the June quarter were up 12% to 2.9 million tonnes from the previous corresponding period.
Whitehaven said annual production of saleable coal rose 26% to a record 10.3 million tonnes, while June quarter production of saleable coal was up 27% to 2.9 million tonnes.
Whitehaven gets most of its earnings from thermal coal, but the price it realised during the quarter fell from $US75.19 a tonne to US$72.81.
Metallurgical coal prices fell from $US100.79 a tonne to $US93.63 in the three months to December.
