Coal Energy increases coal production 12.5% mom in March, down 40% yoy

Coal Energy (CLE PW) reported total coal production in March at 91.6 kt, a 12.5% mom increase but down almost 40% yoy. The monthly growth came from a 17.8% advance in thermal coal mining to 65.5 kt and 5.4% growth in coking coal extraction, while Coal Energy’s saleable coal production from its waste recovery facility slid 5.8% mom. The company stated that it’s keeping its intention to maintain coal production at the low level of about 80 kt per month until June 2013 in order to prevent accumulating onsite stockpiles of saleable coal.

Roman Topolyuk: We reiterate our FY2013 expectations of 1.3 mmt of total coal mining (-17% yoy) and around 192 kt (-27%) of coal production from waste reprocessing. Assuming Coal Energy sells all its produced coal, we estimate finished coal inventories at around 200 kt as of end-March, which is more than double the company’s total current monthly production. We don’t expect to see significant inventories offload in April-June. We anticipate some improvements in coal demand starting mid-summer (the first quarter of Coal Energy’s financial year) with the start of preparations for the heating season by power plants and a possible upturn on the steel market.