March 21, 2017 / 6:44 AM / 9 months ago

UPDATE 1-New Hope profit soars, confident coal prices won't drop

* H1 profit nearly quadruples, topping own forecast

* New Hope sees thermal coal holding at $75-85 a tonne

* Sees prices sustainable as output not growing (Adds CEO comments)

By Sonali Paul

MELBOURNE, March 21 (Reuters) - New Hope Corp, Australia’s top independent coal producer, reported a near quadrupling in first-half underlying profit after four years of pain, and said it was confident coal prices would hold near current levels thanks to producers’ discipline.

The company’s managing director, Shane Stephan, told Reuters on Tuesday he believed thermal coal prices would stay within China’s price target of $75-$85 a tonne, as no major supplies were expected to enter the market and weaken prices.

“We’re seeing this domestic Chinese industry policy as being a significant influence on Asian thermal coal pricing for the foreseeable future,” Stephan said in an interview.

Strong prices and New Hope’s acquisition of the Bengalla coal mine in Australia helped the company report its best first-half profit in four years, with underlying profits at A$54.9 million ($42.4 million) for the six months to Jan. 31.

The result was slightly higher than the top end of New Hope’s upgraded guidance last month.

Sale volumes rose 47 percent to 3.96 million tonnes, thanks to Bengalla.

Stephan said he believed seaborne coal prices were sustainable because producers in Australia, Indonesia and Colombia had not increased output even after last year’s strong price surge.

Australia’s Newcastle coal prices at $81.50 are about 50 percent higher now than they were a year ago, having peaked at around $116 in November.

“The supply is steady despite the increase in price, which gives me confidence that we’re looking at a little bit more reasonable future,” Stephan said.

“There is quite a gap, in our opinion, between the price needed for sustainable profitability of existing coal assets and the price required to encourage new production capacity,” he said, adding that environmental challenges made it tough to bring on new production.

He said he did not fear plans by India’s Adani to build a 25 million tonnes a year mine in Queensland targeting first production in 2020, as that output was going to Adani’s own power stations in India.

$1 = 1.2942 Australian dollars Reporting by Sonali Paul; Editing by Leslie Adler and Randy Fabi

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