@Psalty that's the first I have heard that coking coal has found...

@Psalty that's the first I have heard that coking coal has found it's way into the thermal coal market. Are you able to provide the source.
It doesn't make sense to me when spot market thermal in Aus is say around US$110Ppt and coking coal is around US$190pt. Why would steel mills and the like pay such a high premium to thermal coal?

I am not saying that NHC won't hit or exceeed guidance. Being in the first quartile of mining costs one would still expect profit for the half as well as really good FCF unless something extraordinarily terrible happened during the quarter.

@Tizard - at cost Malabar as at 30 June 24 is worth approximately $500m (total equity). Even if they were to increase their stake in Malabar they could only increase their stake by 3% every 6 months. The fact that NHC just under 20% does not mean that NHC will purchase more shares. It also does not mean they are waiting for an opportunity to takeover the company. I have seen many a company hold 19.95% of a company and never make a takeover bid. One example that springs to mind was back during the GFC days when Leighton Holdings was a 19.95% of Macmahon Holdings. Sometimes they just want to take a controlling interest for strategic purposes, like blocking any anyone from trying to takeover the company.

Given the state of the coal markets right now, I doubt very much that NHC will buy more shares in Malabar. It would be poor financial management during a time where coal prices are still well over the long term average. Just saying.

Article in AFR on Jan 12, 2025

Coal price slumps to three-year low as supercyclefades
Elouise Fowler and Peter Ker

The price of Australian coal has slumped to a three-and-a-half-year low on surgingsupply, signalling the end of a super-cycle that propelled local miners to recordprofits and created billions of dollars in wealth.The benchmark price for top-quality NSW thermal coal has fallen by more than 4per cent to $US115.51 a tonne, according to GlobalCoal. The price has fallen 23 percent over the past five months and is below the low of $US116.08 a tonne recordedin February last year.

If it remains below $US120 a tonne level for the next three weeks, January would bethe weakest month for NSW thermal coal prices since May 2021, according to datapublished by commodity price agency Argus.Similar price slumps have been noted in Queensland coking coal and intermediatequality thermal coal, marking the end of athree-yearboomdrivenbysupplyconstraints, strong demand andgeopoliticaldisruptions.The shift is set to shrink coal companies’ profit margins in the coming earningsseason, and erode Treasury’s tax revenue from corporate profits – an incomestream that has helped generate federal budget surpluses[https://www.copyright link/policy/economy/chalmers-tipped-to-deliver-a-second-budget-surplus20230804-p5dtzv]over the pasttwoyears, thefirst since2007.

For much of the past three years, a potent mix of post-pandemic recovery, energyinsecurity following Russia’s invasions of Ukraine and rising coal power demand inemerging economies has kept prices high.At its peak, top-quality NSW thermal coal – used for power generation – fetched anaverage of $US432.45 per tonne in September 2022, and second-tier Australianthermal coal fetched an average price of $US233 per tonne a few months earlier inMarch, according to Argus.

Top quality Queensland coking coal – used for steelmaking – traded above $US670per tonne in March 2022 as the world scrambled to wean itself off Russian coalexports, according to S&P Global Platts.

Robust supply levels

Rory Simington, an analyst at Wood Mackenzie, attributed the fall in thermal coalprices to a warm winter in the northern hemisphere, which has curbed demand forheating, coupled with robust supply levels. “The milder winter has seen [coal]stocks rise and prices decline – as well as record levels of both production andimports in November,” he added.Europe’s Copernicus agency confirmed on Friday[https://www.copernicus.eu/en/news/news/copernicus-global-climate-report-2024-confirms-lastyear-warmest-record-first-ever-above]that lastyearwas[https://www.copernicus.eu/en/news/news/copernicus-global-climate-report-2024-confirms-lastyear-warmest-record-first-ever-above]the hottest on record, withaveragetemperatures1.6 degreesabove pre-industriallevelsbecause of record-high greenhousegasemissions.

A slow shift away from fossil fuels towards renewable sources of electricitygeneration and challenges faced in decarbonising industries[https://www.copyright link/companies/mining/rio-bows-to-investor-pressure-on-green-steel-spending20240319-p5fdnt] such as steelmakinghavehelped sustain the demand for coalandkept emissionshigh.But a confluence of factors tipped the thermal coal market into oversupply, andproducers in key exporting nations – including Australia, China, Indonesia, SouthAfrica, and Russia – boosted output in response to the higher prices and to alleviatethe supply shortage.


Prices for thermal coal with 5500 kilocalories of energy per kilogram – the mostcommon type of coal exported from NSW – have fallen to the lowest in three-and-ahalfyears, according toArgus. This coal, accounting for more than halfofAustralia’s thermal coalexports, fetched anaverage of $US83per tonneinDecember, thelowest price sinceMay 2021,when alargeportion of theworldwaslockeddown due to thepandemic.Top-quality NSW thermal coal, with 6000 kilocalories per kilogram, fetched anaverage of $US127 per tonne in December according to Argus data. There havebeen only two occasions since July 2021 where average monthly prices for suchcoal have been lower – in February 2024 and November 2023.The average price for January looks set to be lower again based on the weeklythermal price index published by GlobalCoal, which put top-quality NSW thermalcoal at $US120.97 on January 3 and then $US115.51 on January 10.Newcastle – Australia’s main thermal coal port – increased exports in November by11 per cent compared with the corresponding period of the previous year, accordingto Intercontinental Exchange, a London-based trading platform.Overall, the data shows thermal coal futures volume rose 9 per cent to 578.3million tonnes last year, compared with 531.7 million tonnes cleared in 2023.China remains a key buyer of Australia’s thermal coal, taking about a third ofNewcastle’s coal exports. Although Australian coal imports have rebounded since

Beijing lifted its two-year ban, a push to limit the need for international supply hasled to record domestic coal output in China.

Weak steel market dents coking coal

Still, Japan’s industrial recovery is likely to support demand for Australianthermal coal and help prices stabilise, given Japan is a long-term key buyer,according to Bloomberg Intelligence. Japan has bought 48 per cent of Australia’sthermal coal over the last three decades.Coking coal prices are mirroring the decline in Australia’s top export, iron ore, asboth commodities grapple with a subdued steel market.“You could argue that weather has impacted the coking coal price as well – in thatthe lack of cyclones has meant steady supply from Queensland,” Wood Mackenzie’sMr Simington said.Prices for coking coal have tumbled from more than $US300 a tonne about 12months ago to below $US200 by the year’s end, according to the energy andresources data analytics firm. The slump has been driven by China’s economicslowdown and continuing property market woes.Premium Australian coking coal hit an average of $US185 per tonne in September,marking its lowest level since June 2021. Last week, it traded around $US200 pertonne.

China’s focus on debt reduction rather than growth has curtailed stimulusmeasures – a stark contrast to the huge infrastructure-driven stimulus of past yearsthat required steel. Instead, Beijing has earmarked $US11 billion in subsidies[https://www.ft.com/content/2fc33585-0a51-4101-a483-728aeafad925] for home appliancesitems such as microwaves and rice cookers.Coupled with the property crisis, the absence of aggressive economic support hasheaped pressure on steel mills.Still, Mr Simington said China’s overall import demand remained robust, withNovember marking a record high. But he observed that Australia’s share of themarket had shrunk as cheaper coal from Mongolia and Russia gained dominance.Australian exports to China are likely to have totalled just 10 million tonnes lastyear, a steep drop from 40 million tonnes in 2020, he said.

Coal prices are expected to remain subdued through most of January, driven byquiet Indian demand and slower Chinese winter restocking, according to SylviaCao, an analyst at S&P Global. However, buying activity could intensify as the LunarNew Year approaches on January 29, based on concerns about potential weatherrelated supply disruptions inAustralia.Prices are projected to average $US220 per tonne in January, rising to $230 pertonne in the March quarter. They are expected to stabilise near this levelthroughout 2025, with a full-year average of $232 per tonne.

Busting bottom line

Even though thermal coal prices are at or near three-year lows, profit margins forthe big producers remain solid. It cost Yancoal between $US54 and $US60 toproduce a tonne of coal last year, excluding state government royalties and the costof shipping the product to customers.But sliding coal prices will increase pressure on miners to curb the extremeinflationary pressures reported over the past few years.Whitehaven Coal’s unit costs more than doubled to $US70 a tonne between 2016and 2024, and managing director Paul Flynn said last year[https://www.copyright link/companies/mining/whitehaven-coal-says-inflation-is-rife-20240719-p5juy0]he expected the cost pressures to persist in a tight labour market.Coal royalties and corporate taxes – along with sky-high iron ore and gas prices –flowed into government coffers during the height of the super cycle, helping tilt thefederal budget back into surplus.However, government forecasters now project significant annual losses incorporate tax revenue as coal prices fall. Thermal coal exports are forecast todecline from $37 billion to $29 billion by 2026, and coking coal exports areexpected to drop from $54 billion to $43 billion this year.