Mongolian Mining predicts lower coking coal prices
April 3, 2014 Category Automotive Metals & Minerals, Minerals
Mongolian Mining, Mongolia’s largest miner of coking coal sold primarily to China, expects the steel smelting ingredient’s price to remain weak this year due to oversupply, although it has gained market share from rivals by expanding processing and logistics operations. “I don’t expect prices to fall below current levels, but I don’t see meaningful price gain either, until demand and supply equilibrium is restored,” Chief Executive Battsengel Gotov told a press conference. Mongolian Mining’s average selling price of its mainstay product, hard coking coal, fell 15% last year to USD92.10 a ton from USD108.40 in 2012, owing to an estimated excess supply of over 30 million tons. The excess is expected to fall to between 10 million and 15 million tons this year, helped partly by higher steel output in Europe and the United States, Gotov said. Mongolian Mining posted a net loss of USD58.1 million for last year, from USD2.5 million in 2012 as finance costs almost doubled to USD95.1 million. Revenue fell 7.8% to USD437.3 million as the 15% fall in the average selling price offset a 26% jump in the hard coking coal sales volume to 4.3 million tons. The firm aims to sell six million tons this year. Although China’s coking coal imports jumped 41% last year to 75.4 million tons as low-cost imports replaced domestic products, Mongolia’s share of the Chinese market fell to 20.4% from 35.7% while that of Australia surged to 40% from 26.2%. Land-locked Mongolia’s competitiveness is expected to be constrained until a government-built railway is completed next year or later.
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