Chinese Coal Restrictions Weigh On Whitehaven

By Glenn Dyer | More Articles by Glenn Dyer

China’s continuing restrictions on coal imports – especially thermal (steaming) coal have impacted the quarterly pricing of major NSW miner and exporter Whitehaven Coal, even though it doesn’t ship any coal to that country.

The latter point helps explain the 16% jump in quarterly sales by Whitehaven.

For at least six to nine months, Chinese authorities have been holding back or slowing down imports of coal from Australia – ostensibly to help the local inefficient coal mining sector and some rival exporters to China than Australia, such as Indonesia (which ships lower quality, cheaper coal).

In its March quarter production report, released yesterday, Whitehaven said the Chinese coal import restrictions were pushing down prices in the thermal coal market, especially in Asian Pacific markets.

“With global growth slowing towards the end of 2018 and the introduction of new import restriction policies in China in November last year and the ongoing enforcement of those policies, the globalCoal Newc Index thermal coal price moderated to an average $US95.88 a tonne for the quarter, approximately 8 per cent lower than the December quarter average,” Whitehaven said .

“Late in 2018, global economic growth slowed and China introduced several policies aimed at deterring coal imports.

“Whitehaven considers China’s policies are targeted at supporting its substantial domestic coal industry which had been under pressure from lower domestic coal prices during 2018, in contrast to the buoyant seaborne market.

“Strong enforcement of these restrictions has placed pressure on exporters of lower quality coals bound for the China market to redirect these tonnes into other markets. This has caused thermal coal prices in the seaborne market for all thermal coal types to moderate in recent weeks.

Whitehaven said coal sales for the March quarter, including purchased coal, were 4.893 million tonnes, 16% above the previous corresponding period. Managed coal sales, including sales of purchased coal, were 6.042 million tonnes, up 12% above the previous corresponding period.

The companies said sales for the quarter exceeded production as ROM stocks built up prior to the end of the December quarter were processed and sold during the March quarter.

“Whitehaven confirms that it is not exposed to coal sales into China. Demand for the company’s high-quality coal from customers in Japan and other Asian countries remains strong and continues to underpin a high proportion of the company’s thermal coal sales,” the company said.

Whitehaven shares rose 0.2% to $3.99. That left the shares down 7.6% so far in 2019.

Glenn Dyer

About Glenn Dyer

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.

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