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UPDATE 1-Whitehaven sees small upturn in coking coal price in late 2014
July 15, 2014 / 12:25 AM / in 3 years

UPDATE 1-Whitehaven sees small upturn in coking coal price in late 2014

* Metallurgical coal output cuts should support price

* Thermal coal seen in oversupply in second half of 2014

* Maules Creek on track to start exporting in March 2015 (Adds annual output, price outlook)

MELBOURNE, July 15 (Reuters) - Australia’s Whitehaven Coal Ltd expects a slight improvement in metallurgical coal prices in late 2014 as producers cut supply, while it expects thermal coal markets to remain oversupplied over the next six months.

Whitehaven, which is on track to start exporting coal from its long-delayed Maules Creek mine in March 2015, said about 19 million tonnes a year of metallurgical coal output had been cut so far and further cuts were likely in the near term.

“This should lead to a modest recovery in prices towards the end of this calendar year,” the company said in its quarterly production report on Tuesday.

Whitehaven expects prices for its metallurgical coal in the September quarter to be in the range of $91-$92 per tonne, down from $93.63 a tonne in the June quarter.

While metallurgical coal supplies have been cut, exports of thermal coal, used in power stations, from Indonesia, Australia and Colombia rose in the first half of the year, outpacing demand growth and driving thermal coal prices down.

“While demand continues to grow, albeit at a lower rate than in recent years, a state of oversupply is expected over the next six months,” Whitehaven said.

The company produced 8.2 million tonnes of saleable coal in the year to June, representing its share of output from the mines it operates, up 23 percent from a year earlier as the Narrabri mine ramped up. Sales grew 18 percent to 8.7 million tonnes.

The A$767 million ($720 million) Maules Creek mine is expected to initially produce 6 million tonnes a year of thermal and metallurgical coal, rising over three years to 13 million tonnes a year.

$1 = 1.0645 Australian Dollars Reporting by Sonali Paul; Editing by Paul Tait and Stephen Coates

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