AUSTRALIAN coal producer Whitehaven Coal sees a silver lining for global coal markets from the signing of the first phase of a trade deal between China and the US on Wednesday.
Whitehaven Coal said in a production update to the ASX that the easing of China-US trade tensions should improve market conditions for metallurgical coal, a key ingredient in steel production in China, and for thermal coal used in power stations to generate electricity.
“The metallurgical coal market recovered in late 2019 from the lows experienced mid-2019,” the company stated.
“The dynamics of the steel market are impacted by the trade tensions between China and the US, so the signing of the Phase 1 trade deal should have a welcome positive impact.
“Today’s signing of the Phase 1 trade deal is expected to provide a boost to global trade.”
Thermal coal prices on international markets have been weakened by the China-US trade dispute in recent months and have also been affected by low gas prices, the company stated.
Saleable coal production at Whitehaven’s mines decreased 16pc to 8mt in the year ended December, 2019, from 9.5 mt in the 2018 year.
Production was affected by an eight-week longwall changeover at Whitehaven’s Narrabri underground mine, and ‘challenging production conditions’ at its Maules Creek mine that included dust and smoke from recent bushfires and labour shortages.
Whitehaven is progressing with its growth strategy to increase production to 50mtpa from around 20mtpa through expansion of its coal mining operations in NSW’s Gunnedah Basin.
