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“We’d like to see more companies cut production. A significant proportion of the global supply is uneconomic,” Ron Vance, senior vp Teck Resources said at the Goldman Sachs Global Metals, Mining & Steel conference in New York on November 21.
The North American met coal industry has been plagued by overcapacity and lower crude steel production from some steelmakers in Europe and Asia which has dampened demand for met coal, he said.
“There is plenty of coal available which is reflected in the coal price,” Vance added.
About 35-40 million tons of met coal output has already been cut – mostly in the USA and Australia – but more capacity needs to be removed from the market.
The biggest impact on the market is the amount of coal coming from the eastern USA, he told Steel First.
Based in Vancouver, British Columbia, Teck has delayed the final stage of development at its 3 million-tpy Quintette coking coal project, in the north east of the province, until the market for coking coal recovers.
Most of Teck’s customers have about 30-40 days of met coal inventories, Vance said.
The company has seen a shift towards shorter pricing to manage price volatility.
“We’ve seen a significant shift [in] our customers' preference for delivery on a ship-by-ship basis. We have 40 customers that use a range of contract pricing terms, but it does look like the trend to shorter-term pricing is on its way,” Vance added.
Canadian diversified miner Teck is calling for more met coal production cuts to balance global supply and demand.