Yancoal shares drop on weaker Q1 performance, tariffs warning
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More news: Shares in Yancoal have dropped 1.5% to $4.74 in early trading on the ASX after the coal miner reported lower first-quarter production and sales amid subdued demand.
The company said strong supply in the market and economic uncertainty stemming from the announcement of US tariffs has compounded the situation.
Yancoal posts dip in Q1 production, sales; eyes price recovery
The news: Yancoal has reported a drop in first-quarter production and sales amid subdued demand but the miner expects prices to recover as high-cost producers reduce supply.
The numbers: Attributable production for the March quarter was down 2% from the December quarter to 9.5 million tonnes, while sales volume dropped 19% to 8.4 million tonnes as the company rebuilt stockpiles. It had an average realised price of $157 per tonne, down 11% from the preceding quarter.
The context: Yancoal said in a release late on Thursday there was strong supply and subdued demand during the March quarter. The miner believes benchmark coal indices are now below the marginal cost on the global cost curve. Therefore, it anticipates supply side reductions from high cost producers, which will lead to a price recovery.
However, the volatility and economic uncertainty stemming from the announcement of US tariffs has compounded the situation.
“There is speculation that various governments could apply stimulus measures if recessionary conditions arise from the application of new tariffs. Such a scenario should prove constructive for demand, but currently there is significant uncertainty and caution in the coal markets,” it told investors in a statement.
The source: ASX
