Yancoal Australia Ltd (ASX: YAL) shares are on the slide on Tuesday morning.
At the time of writing, the ASX 200 coal stock is down slightly to $6.59.
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Why is this ASX 200 coal stock sliding?
The company's shares are under pressure following the release of its quarterly update, which highlighted softer production and sales volumes alongside rising cost pressures.
According to the update, attributable saleable coal production came in at 9.0 million tonnes for the first quarter. This is down 14% compared to the prior quarter and 5% lower than the prior corresponding period.
Attributable coal sales were also weaker at 8.2 million tonnes, reflecting both lower production and the timing of shipments during the period.
Total run-of-mine coal production was broadly steady year on year at 15.0 million tonnes, though lower than the previous quarter.
Management noted that the first quarter was always expected to be the weakest period for production in FY 2026, with output forecast to increase over the remaining quarters of the year.
The company reported an average realised coal price of A$146 per tonne, which was slightly lower than the prior quarter and down from A$157 per tonne a year earlier.
Management advised that this reflects a mix of factors, including contract structures and timing, which can delay the flow-through of higher coal prices into realised pricing.
Encouragingly, coal price indices increased during the quarter, which management expects will begin to support realised prices from the second quarter onwards.
Cost pressures building
One of the key themes from the update is rising cost pressure, particularly from higher diesel prices.
Diesel represents a meaningful portion of mining costs, and the ASX 200 coal stock has warned that recent increases are expected to push FY 2026 cash operating costs toward the upper end of its guidance range of A$90 to A$98 per tonne.
Management also flagged some uncertainty around diesel supply beyond May, noting that contingency plans are in place should supply constraints emerge.
The company's CEO, Sharif Burra, explained:
We have secured diesel supply until around the end of May, and are working closely with our main suppliers. Beyond this horizon, continuity of diesel supply may become less certain, and as a prudent measure we have established contingency plans. Given the outlook for diesel prices, we now anticipate cash operating costs for the year could be close to the upper end of our guidance range based on the current forecasts. Uncertainty in global oil and diesel markets will require ongoing assessment of our cost profile.
Outlook
The ASX 200 coal stock has maintained its FY 2026 production guidance of 36.5 million to 40.5 million tonnes.
Capital expenditure guidance of A$750 million to A$900 million also remains unchanged.
Burra adds:
In the current market conditions, our scale, margins, financial strength and access to debt serve us well to compete in the seaborne global market, and we have recently utilised these advantages to grow the business by acquiring a high-margin, long-life asset.
Yancoal Australia shares are up 38% over the past 12 months.
