New Hope (ASX:NHC) share price on watch on Q2, 48% higher coal prices

The New Hope Corporation Limited (ASX:NHC) share price will be on watch after delivering its Q2 update, with coal prices 48% higher.

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The New Hope Corporation Limited (ASX: NHC) share price will be on watch today after releasing its FY21 second quarter update.

New Hope is one Australia’s biggest coal miners with operations in both Queensland and NSW.

New Hope’s second quarter update

The coal company said that its total saleable coal production for the quarter to January 2021 fell 18% to 2.88 million tonnes, while total coal sold decreased by 14.8% to 3.02 million tonnes.

Looking at the half-year to January 2021, total saleable coal production was down 27.9% to 6.21 million tonnes and total coal sold fell by 23.3% to 6.36 million tonnes.

New Hope said that there had been stronger demand for coal forecasted as economic activity increases across Asia. Total coal sales for Bengalla were better than planned at 2.47 million tonnes.

In its NSW operations, the company said the operation produced less bypass coal than expected due to market pricing supporting delivery of processed coal to maximise value. Prime material movement is ahead of plan with good performance of the excavator and truck fleets, and the dragline since its return to full operations. Recent storms and wet weather in Newcastle resulted in port closures and rail network outages during the quarter with some cargoes slipping into the next quarter. Bengalla expects to deliver above plan sales tonnes for the full financial year.

Regarding the new Acland Mine, the High Court of Australia handed down its decision on an appeal by the Oakey Coal Action Alliance against the rulings of the Queensland Court of Appeals. The High Court upheld the appeal and ordered the matter be re-heard in the Queensland Land Court for a third time.

The West Moreton operations continued to focus on rehabilitation, monitoring and maintenance activities at the Jeebropilly, New Oakleigh and Chuwar sites during the quarter. At the New Oakleigh site, 241,000 bank cubic metres of material has been removed from remnant spoil and relocated into the Normanton Pit void. The preliminary cattle grazing trial result showed that the productivity of the rehabilitated pasture is comparable to, or greater than, the pre-mining levels.

Coal prices

New Hope said that the monthly average Newcastle coal price (in US dollar terms) has increased by 48% since October 2020 on the back of robust demand supported by a colder than expected northern hemisphere winter.

The high ash thermal coal market has seen similar gains despite China’s continued ban on the importation of Australian coal.

New Hope expects that pricing will flatten as the northern hemisphere comes out of the peak winter buying period.

Economic activity in Asia is exhibiting levels stronger than expected and this is turning into stronger than forecast thermal coal demand, according to New Hope.

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