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Yancoal Reports 2019 Results

Coal News - Published on Mon, 20 Jan 2020

Image Source: Yancoal
Yancoal produced 35.6 million tonne to meet its 2019 operational target for attributable saleable coal production. Attributable mine production sold during the year was also 35.6 million tonne. Yancoa said “The lower realised average price Yancoal achieved in the Quarter reflected the global thermal coal market trend observed through 2019. We continued to optimise our product split to meet market demand and maximise price, with thermal coal representing 87% and metallurgical coal 13% of attributable sales volume during the Quarter. The thermal coal price will be influenced by pending policy decision in several customer markets and exchange rate movements possibly impacting future supply from miners with a US dollar cost base. Despite the recent index price stability, there is the potential for price volatility to evolve during the first half of 2020.”

COAL MARKET OUTLOOK - During Q4 2019, international thermal coal market conditions continued to be defined by supply strength. Good weather and the absence of other outage events in key global coal-producing regions continued a period of uninterrupted global supply. During the Quarter, Japanese buyers made purchases of thermal coal in the spot market, but these appear motivated by low prices rather than an increasing demand profile. So far, Chinese demand for thermal coal has been stable and well supplied by domestic production during the winter period. Activity in the Korean coal market has been subdued pending a final Government decision on winter shut-downs; however, it has been announced some coal-fired power units will be closed for three months to combat fine dust emissions. In Yancoal's view, the outlook for the seaborne traded thermal coal price in 2020 remains uncertain despite the recent stability in index prices. Demand is subject to pending policy decisions in several key markets. On the supply side, foreign exchange movements may lead thermal coal producers with a US dollar cost base, such as Indonesia and Colombia, to curb supply; we do not anticipate such reductions to have an impact on spot prices until later in 2020. Metallurgical coal market and spot pricing were also weaker during Q4 2019 as excess steel supply and price competition in the international steel market reduced metallurgical coal demand. The trend toward lower steel output and metallurgical coal demand appears set to continue into 2020.

Yancoal generally sells high-grade thermal coal priced off the globalCOAL NEWC 6,000kCal NAR index and lower grade volumes off lower energy level benchmarks. Yancoal sells to a variety of industrial customers, predominantly within Asia. The majority of Yancoal sales are to Japan, Korea and China with no single country representing more than 25% of total sales volume.

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Posted By : Arun Huidrom on Mon, 20 Jan 2020
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