Australian miner New Hope has reported flat production of saleable coal quarter-on-quarter, but has seen a positive increase in total coal sales. The company announced that coal sales were 7% higher than in the prior period. However, New Hope acknowledges that the mild winter in the Northern Hemisphere has resulted in soft demand for coal, which has put downward pressure on prices.
Despite this, the API-5 price has remained stable due to China’s strong demand for lower energy coal supply. API-5 has created a floor for the gC NEWC, and the expectation is that prices will stabilize at current levels. New Hope’s Bengalla Mine, which has the capability to alternate production between gC NEWC and API-5, continues to optimize production and sales based on the changing pricing indices.
The Bengalla Mine reported a saleable production of 1.8 million metric tons for the quarter, which is 8% lower than the prior quarter. This decrease can be primarily attributed to a plant shutdown. However, coal sales for the quarter remained in line with the prior quarter, reaching 1.8 million tons.
New Hope’s New Acland Mine showed significant progress, with a saleable coal production of 0.23 million tons for the quarter compared to 0.06 million tons in the previous quarter. The mine recommenced operations and made its first coal export since then, with a shipment of 11,000 tons sailing in December 2023, followed by a larger shipment of 92,000 tons in January 2024.
During the quarter, the New Acland Mine has utilized spot rail capacity along with contracted volumes to deliver its coal products to the port. The mine also plans to continue sourcing spot rail capacity wherever available.
Overall, despite the challenges in the market, New Hope remains optimistic about its coal sales and expects prices to stabilize at current levels. The company’s ability to adapt its production and sales strategy based on market demand, as demonstrated by the Bengalla Mine and New Acland Mine, puts them in a favorable position in the coal industry.
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Analyst comment
Positive news:
– Total coal sales for New Hope were 7% higher on the prior period.
– Bengalla Mine has the capability to alternate production between gC NEWC and API-5 with ease, optimizing production and sales based on changing pricing indices.
– New Acland Mine’s saleable coal production significantly increased from the prior quarter, and they have successfully recommenced coal exports.
Negative news:
– Flat production of saleable coal for New Hope quarter-on-quarter.
– Bengalla Mine’s saleable production was 8% lower than the prior quarter due to a plant shutdown.
– New Acland Mine’s saleable coal production for the quarter is relatively low.
Neutral news:
– A mild winter in the Northern Hemisphere has resulted in soft demand and downward pressure on coal prices.
– The API-5 price has remained stable due to strong Chinese demand for lower energy coal supply.
– Prices of gC NEWC are expected to stabilize at current levels, with API-5 creating a price floor.
