Singapore (Platts)–28Jan2015/306 am EST/806 GMT
US coal miner Peabody Energy expects global metallurgical coal demand growth to outstrip supply gains this year for the first time since 2011, on rising Asian consumption.
Met coal sales from Peabody’s Australian mines rose 10.7% from the previous year to 17.6 million mt in 2014, the company said in its fourth-quarter 2014 report Tuesday evening.
This exceeded a previous sales target of 16 million-17 million mt, and came in spite of a 1.5 million mt production cut at its Burton Mine in Queensland, Australia, earlier in the year. Sales in the fourth quarter rose 11.9% year on year to 5 million mt.
Seaborne met coal demand will rise 10-15% over the next three years, led by ongoing urbanization and industrialization in Asia, the St.Louis-based company said.
Meanwhile, met coal supply is expected to be flat in 2015 with modest Australian growth offset by North American cutbacks, the miner said.
Approximately 25 million mt of output cuts have been announced over the last 12 months, with an estimated 15 million mt to be realized by the middle of this year, according to the statement.
“2014 was a turbulent year for the coal markets as slowing near-term demand growth and strong seaborne supplies resulted in continued coal price declines,” said Peabody Energy President and CEO-Elect Glenn Kellow.
“We would anticipate seeing catalysts for market improvement, including stable seaborne metallurgical supply.” Peabody said it expects to sell 245 million-265 million mt of both metallurgical and thermal coal in 2015, having sold 249.8 million mt in 2014.
The miner is targeting Australian met coal sales in 2015 of 15 million-16 million mt, on a 2-4% reduction in operational costs.
Demand growth is expected to be driven by increased appetite from Indian steelmakers with additional infrastructure projects this year, Peabody said.
Cash costs at the company’s met and thermal operations in Australia segment fell 8.3% year on year to $68.05/mt.
Costs are expected to fall to $65/mt in 2015 on a weaker Australian dollar and lower diesel prices, investment bank Barclays said in a research report dated January 27.
The first-quarter 2015 met coal benchmark for premium low-vol hard coking coal settled at $117/mt FOB Australia, down $2/mt from the prior quarter.
The premium mid-vol HCC price increased to $116.50/mt FOB Australia and the benchmark low-vol PCI settled at rollover pricing of $99/mt FOB, which together represent the majority of Peabody’s Australian exports, the company said.
–Kenneth Foo, kenneth.foo@platts.com –Edited by Haripriya Banerjee, haripriya.banerjee@platts.com