Coal prices may have peaked, top Philippine miner says

“At these levels, people will overproduce and then there will be too much supply, so prices will drop,” said Isidro Consunji, chairman of Semirara Mining & Power. He said in an interview Monday that power plants are already switching to other less expensive fuels.

A shortage of coal heading into winter has sent prices in China and around the world surging to record levels. The coal that Semirara produces has doubled to about $110/t from $50/t to $65/t in the second quarter, Consunji said.

China last quarter bought all of Semirara’s 1.5-million-ton stock of unwashed coal at about $40/t, he said. The company, which exports about half of its output, sells 90% of overseas shipments to China.

High-quality thermal coal loaded on ships at Newcastle port in Australia isn’t likely to hit $300/t, Consunji said, after surging to $203.20/t on Friday to break the previous record set in 2008. Additional supply is expected to come into the market in five to six months, he said, easing pricing pressure.

Semirara, which produces 90% of the Philippines’ total coal output, expects revenue from the commodity to rise more than 50% in the fourth quarter. That would help Semirara and parent DMCI Holdings return to pre-pandemic profit levels this year after a sharp decline in 2020, Consunji said.

The miner expects to produce at its maximum capacity of 15 million tons in 2021, unlike last year when demand was low.

Semirara has seen its share price climb more than 70% this year to a two-year high. The stock closed 7.4% higher at 23.95 pesos on Monday.