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19 Apr 2013 07:48
DJ MARKET TALK: Add To
China Telcos After Weak Performance - MS
19 Apr 2013 08:39
DJ
Yancoal Says Weak China Coal Demand to Weigh on Prices
SYDNEY--China's coal demand weakened again in the past two months, said
Yancoal Australia Ltd. (YAL.AU), adding that an oversupply of the fuel would keep prices near recent multiyear lows.
After a slight rebound earlier this year prices of coking coal, used to produce steel, and thermal coal, used for generating electricity, have fallen to their lowest levels since about six months ago--when they were at three-year troughs.
The declines have been triggered by falling demand from China, the world's largest coal importer, at a time when other key markets like Japan and South Korea remain weak. Yancoal Australia is majority owned by Hong Kong-listed Yanzhou Coal Mining Co. (YZC), one of China's top three producers.
"Since February, Chinese demand has weakened and thermal coal prices and spot metallurgical coal prices have declined despite some supply disruption in Australia caused by heavy rain," Yancoal said in a statement.
"Both metallurgical and thermal coal markets remain oversupplied and prices are expected to remain under pressure for some time," it said.
Still, the Sydney-based company said the decision by some miners to shelve new projects and sell existing mines to improve profitability should, in the longer run, foster a "healthy industry" for the remaining producers. It said cutting costs from its mines remained a priority.
Yancoal late Thursday reported a 5% drop in coking-coal sales and a 16% decline in thermal-coal sales year-on-year to 1.38 million tons and 1.85 million tons, respectively.