The Herald reported that Hunter coal prices have slumped by a third since the start of the year, leading to predictions of job layoffs and potential mine closures as exports from the Port of Newcastle are about 20 million tonnes or 15% down on targets set at the start of the year.

As well as the price cuts, coal companies are locked into potentially expensive take or pay haulage contracts with rail companies and coal loaders for coal they are not selling.

To top things off, a shipping queue that stood at 63 vessels means that coal companies are still paying millions of dollars a year in demurrage or late loading fees.

The downturn in the coal chain's fortunes is set out in the latest editions of the McCloskey Coal Report, which looks at length at the global oversupply of thermal coal.

Contract prices for Hunter thermal coal are set this year at about USD 115 a tonne, but spot prices that had hit USD 120 a tonne at the start of the year have fallen to about USD 85 a tonne. Some low quality, high ash coal going to China has been selling for as little as USD 76 a tonne.

At these prices, some mines could be losing money on their sales, leading McCloskey's to report that production cuts and layoffs, or even mine closures, could be imminent. The situation was even harsher for some new planned coalmines that had predicted costs of USD 100 a tonne or more.

Source - The Herald

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