Corona Epidemic, Trade Disputes Hurt Global Coal Miners

Sharp decline in metallurgical coal prices in later half of 2019 trigged by broad-based demand weakness in all major consumption regions excluding China followed by weakness in China itself because of the coronavirus epidemic are hurting mining companies across the globe.

Weak demand for coking coal in India is also being felt by them, several global mining companies like BHP, Whitehaven, Glencore and Peabody have told its investors as they reported either losses or sharp cuts in profits during the six months period ending December.

With the Platts Premium Low-Volatile Metallurgical Coal price index weakened markedly in the first half of the FY20, weaker demand from Europe and India and rising supply, mostly in the mid-quality bracket, contributed to the correction.

BHP

The largest seaborne supplier of premium hard coking coal saw its met coal business contributing operating profit of around $1 billion, at a margin of 37 percent, an otherwise strong performance which was more than offset by a 22 percent reduction in price and the impact of major planned washplant maintenance.

Whitehaven

Whitehaven of Australia is a major seller of coking coal to India with 49 percent of its sales being shipped here in the first half of 2019, has been bush fire, US-China trade disputes and now coronavirus epidemic impacting its financial health. It has seen temporary loss of demand for coal in China due to the epidemic, which, however, is being matched by drop in supplies of coal in China for the same reason.

“The trade dispute between the US and China during FY2019 contributed to softness in global demand and in demand for thermal coal; it has also contributed to weakness in the seaborne thermal coal price, while low European gas prices, an increase in the European price of carbon and relatively low seaborne spot LNG prices have also weighed upon coal prices over the past two years,” Whitehaven said while announcing a 30 percent drop in revenues for the six months period to December.

Glencore