The price of high-quality thermal coal has increased sharply in the past half year. However, the largest coal producer in the Philippines predicts coal prices have reached a threshold and will gradually decrease.
According to the head of the largest coal miner in the Philippines, coal prices may have peaked after hitting a record. However, prices are likely to remain high until the first half of 2022.
“At this price point, miners will overproduce and when that happens, the excess supply leads to a drop in prices,” he said in the interview, Isidro Consunji, President of Semirara Mining & Power Corp. Question on 4/10. He also adds that many power plants have switched to other, less expensive fuels.
Coal price chart over the past year.
A winter shortage of coal has sent coal prices in China and the world soaring to record levels. Mr. Consunji said coal produced by Semirara doubled to $110/ton from $50-65/ton in the second quarter.
In the last quarter, China bought the entire unwashed coal storage with 1.5 million tons of Simirara for about 40 USD / ton. 90% of Simirara’s coal exports are sold to China.
He said high-quality thermal coal is unlikely to reach $300/ton after rising to $203/ton on October 1, breaking the record set in 2008. Additional supply to the market is expected to appear on the market in 5-6 months, helping to relieve price pressure.
Semirara, which produces 90% of the Philippines’ total coal production, estimates that coal sales will grow more than 50% in the fourth quarter. This should help Semirara and parent company DMCI Holdings return to pre-pandemic profitability this year after a sharp decline in 2020.
Shares of Semirara are up more than 70% this year, to a two-year high.
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