Whitehaven Coal Ltd. Friday downgraded its fiscal-year production forecast, citing disruptions from heavy rainfall and the Covid-19 pandemic. Here are some remarks from its quarterly operations report.


On thermal coal market:

"In 2022, demand for seaborne thermal coal remains strong and ongoing constraints from both Australia and Indonesia have seen thermal prices soar once again. In Australia, Covid is adversely impacting production as the Omicron wave runs through NSW [New South Wales] and Queensland. The December quarter also saw wet weather cause flooding in the Hunter Valley and Gunnedah Basin, which impacted mining operations, including cutting access to some mines. In Indonesia, the government imposed an export ban from 31 December for the month of January or until domestic power utility PLN achieved regulated inventory levels. As at 11 January exports restarted for some producers, however the ban has reduced exports of seaborne coal supply by approximately 10 million tons in January MTD [month to date].

"Thermal coal customers came to the market across the December quarter to procure supplies through to the March quarter, in many cases having to accept inferior quality to what they were seeking. More recently, some tenders have attracted zero bidders, a strong indication that supply is very tight, and incremental supply is almost non-existent. Physical prices for 6000 CV quality coal for near term delivery are at substantial premia to the paper market."


On coking coal market:

"Premium low volatile hard coking coal (PLV HCC) FOB Australia averaged US$369.10/ton across the December quarter, up 41% on the September quarter average of US$262.30/ton. Supply constraints for metallurgical coal have emerged over the end of the December quarter due to increased rainfall in Queensland related to La Niña weather patterns. In addition, a number of tropical cyclones have formed in the Coral Sea adding to concerns of possible further supply interruptions. As a result the PLV HCC spot price has remained strong, currently at US$388.13/ton January MTD. The Platts SS index has increased in January to US$254/ton MTD after averaging US$234.97/ton for the December quarter. Both thermal and metallurgical coal prices are expected to be well supported over CY22 [calendar year]."


Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com


(END) Dow Jones Newswires

01-20-22 1732ET