Walter Energy sees met coal demand improving in 2014, delays asset sales

US coking coal major Walter Energy expects demand for metallurgical coal to increase in 2014, the miner said on Thursday February 20.

Paragraph entered by Atlantic migration, in order for SteelFirst articles to display correctly on Metal Bulletin.

The miner’s ceo, Walt Scheller, said in a call on Thursday that it expected coking coal demand to increase in 2014 by almost 30 million tonnes.

Walter Energy slashed its losses by more than 50% year-on-year in 2013, reporting a net loss for the year of $359 million, down from more than $1 billion in 2012. This was a result of higher output, it said in its fourth-quarter 2013 results.

The miner saw metallurgical coal output increase by 28.3% year-on-year to 3.2 million tonnes in the fourth quarter of 2013.

Cash production costs fell by 28.1% year-on-year in the quarter to $68.02 per tonne as a result of continued favourable operating performances by the company’s mines in the US state of Alabama.

Steel mills had received many offers for coking coal at low prices, the miner said. But while customers have requested additional tonnages from the miner, price levels were not attractive, analysts at Doyle Trading added.

Walter Energy’s average selling price for hard coking coal in the fourth quarter of 2013 was $137.39 per tonne, down from a fourth-quarter 2012 average price of $152.50 per tonne.

Pulverised coal injection (PCI) material sales averaged $118.63 in the quarter, compared with $127.83 the previous year.

The miner said that it would review production at its Wolverine PCI mine if it expected prices to fall below the mine’s break-even level of $115 per tonne for a significant period.

Metal Bulletin’s index for premium low-volatility coking coal fob Australia stood at $135.88 per tonne on Friday, down from more than $160 per tonne in September.

Asset sales delayed
Walter Energy has delayed its planned asset sale beyond its April target because of the current market weakness.

The assets the miner is most likely to divest are its port in Mobile, Alabama, part of its Western Canadian operations, or its natural gas and coke businesses, Doyle analysts said.

The company’s gas and coke businesses earn the producer around $5 million in earnings per quarter before interest, taxes, depreciation and amortisation, the analysts added.

What to read next
Market participants are cautiously optimistic about a rebound in iron ore concentrate premiums, with steelmakers around the world set to ramp-up production in line with an anticipated increase in demand for steel products, Fastmarkets understands
General Motors (GM) is investing $650 million to develop the Thacker Pass mine in Nevada, the largest known source of lithium in the US and the third largest in the world
Electrolysis processes developed by Boston Metal and Electra that eliminate the need for coal in steel production could be key to a net-zero emissions future for the metallics industry, attendees learned at Fastmarkets’ conference on January 17-19 in Dallas
Low supply, strong demand to spur scrap prices higher in Feb, market says
US deep-sea ferrous export prices from the East Coast to Turkey have plateaued, with a Turkish mill purchasing a cargo at prices stable from the last-reported sale
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
Proceed