Steelmaking coal prices, which have more than doubled this year, could stay high for several quarters as supply from mines that have restarted take time to reach the market, an executive at Teck Resources Ltd, the world’s second-largest exporter, said.
Current spot prices of above $200 a tonne are unsustainable, and the Canadian miner expects prices to settle between $100 and $200 a tonne, Greg Waller, Teck’s vice president for investor relations and strategic analysis, told Deutsche Bank’s 24th annual leveraged finance conference in Scottsdale, Arizona.
Hit by a slowdown in China’s demand for steel, coal miners globally had been shutting down mines for the past three years as prices for steelmaking coal, also known as coking coal, dropped from more than $300 a tonne in 2011 to below $100 a tonne this year.
But in recent weeks, prices have soared on tighter regulations on local production in China.
“Given the inability of the industry to respond to the tightness in the market, we could be looking at these very good prices for a number of quarters,” Waller said.
He said it takes three months to a year for idled mines to be restarted.
Teck, which has six coal mines in Western Canada, has “a little bit” of additional capacity it could tap through overtime work and working on public holidays. But it has no plans to restart its Quintette mine in British Columbia, Waller said.
“Nobody is really going to make an investment decision on the basis of six weeks of pricing,” he noted.
Source: ReutersPrevious Next