Pain for coal miners as China buys local – The Australian Financial Review

Wood Mackenzie’s Asia Pacific head of coal, Rory Simington, said the prime motivation behind China’s domestic focus was to support its own coal companies and the workers they employed.
But in a reference to diplomatic tensions between China and Australia, he said political factors had also worked against Australian coal, with Chinese buyers preferring Russian and Indonesian product when they did buy imported coal.
Whitehaven is not a big player in the market for ”5500” coal, but the prices it receives for its higher-quality coal are affected by fluctuations in the 5500 market, and Mr Flynn suggested geopolitics could be at play.
“You can see the China price is actually quite high, so there is an obvious temptation to dip into the seaborne market and start pulling some coal out there, which would be an obvious motivation for them but for the geopolitical type machinations that I won’t even try to go into,” he said.
S&P Global Platts analyst Deepak Kannan said weaker than expected production by Chinese hydroelectric generators was also stoking demand for coal inside China, and that demand had combined with coal import limits to create the rally in coal prices inside China.
Shares in Whitehaven rose by 4 per cent on Tuesday after the miner revealed it had beaten analysts’ forecasts for both production volumes and received prices over the past three months.
Record production volumes over the past three months gave Whitehaven some consolation after a disrupted year in which production slumped to a four-year low and coal sales slumped to a five-year low.
The company also built up its coal stockpiles over the past three months, suggesting coal sales could be stronger than normal in coming months.
Whitehaven’s flagship product is thermal coal with energy content above 6000 kilocalories per kilogram, and benchmark prices for that product slumped by 13 per cent to average $US55 per tonne in the three months to June 30.
But Whitehaven received 7 per cent better than that average price as customers paid a premium for the high-quality product that comes out of Whitehaven’s Maules Creek and Narrabri mines in NSW.

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