Coal Energy mining falls 4% mom in December

Coal Energy’s coal mining dwindled 4% mom to 142.6 kt in December, according to the company’s monthly production report published on Jan. 15. Coal production from waste reprocessing slid 7% mom to 7.3 kt. Consequently, 1HFY13 coal mining slowed to 920.7 kt (+17% yoy), and coal output from waste recovery to 141 kt (+35%).

Roman Topolyuk: Coal Energy’s operating performance in December was influenced by deteriorating coal market conditions in both its sub-segments – coking and thermal coal – for the second consecutive month. There are scarce signs for recovery soon. Its European peer, New World Resources (NWR PW), reported on Jan. 14 a negative outlook for steam coal in Europe that was exacerbated by high stockpiles of thermal coal, which are above the historical average, and declining contract prices. This underlines limited export options for Ukrainian miners. Coupled with historically high stockpiles of thermal coal in Ukraine as well (up 1.6x yoy to 5.7 mmt as of Dec. 1, 2012), we don’t exclude that Coal Energy may decrease its FY2013 mining plans to better match market demand. The most recent 2013 outlook, revealed by management in October 2012, was for 2.2 mmt, or +38% yoy.