Several US coking coal mines cut output in 4Q

Several major US coking coal mines cut output in the last quarter of 2019, as falling European and Brazilian demand and the trade war with China drove up inventories and weighed on prices.

Most US mines had raised output in the second quarter amid robust demand and heavy rainfall in Queensland, Australia delaying shipments to Europe. The Argus high-vol A fob Hampton Roads assessment reached a yearly high of $205/t in March, before falling to $133/t by the end of September.

Arch Coal cut production at all four of its Appalachian metallurgical coal mines in the fourth quarter. Output at Leer, the largest of Arch's coking coal operations, fell by 17.7pc from the third quarter to 1.04mn st (946,303t), although this was up by 8.49pc on the year. Leer's output for the full year was up by 15.1pc at 4.27mn st.

Arch cut production at smaller mines Beckley Pocahontas and Sentinel by 1.28pc and 22.62pc from the third quarter to 243,928st and 173,176st respectively, having already lowered production by 12.9pc and 39.1pc in the third quarter.

Production at Arch's Mountain Laurel mine was nearly halved to 256,012st in the third quarter, and fell by a further 26.7pc in the fourth quarter to 187,755st, almost 60pc below output a year earlier. This drop was associated with the transition from a long wall to a room-and-pillar operation, which started three months earlier than initially planned in November, and was completed in January. Arch expects the transition to lower unit costs by $10/t. The company plans to relocate the longwall system to its Leer South development, where it expects operations to begin in the third quarter of 2021.

Coronado's Buchanan mine produced 988,264st in the fourth quarter, down by 27.4pc from the previous quarter, with quarterly production having ranged between 1.21mn st and 1.37mn st since the start of 2018. Coronado shut the mine between 16 and 26 December while waiting for the trade deal between China and the US to conclude amid high inventory, the Virginia Department of Mines, Minerals and Energy said. Production at Buchanan fell by 4.81pc on the year in 2019 to 4.94mn st.

Ramaco's Berwind mine and United Coal's Affinity mine lowered output by 21.1pc and 9pc to 45,481st and 220,417st respectively.

Peabody's Shoal Creek mine was an exception in raising output in the fourth quarter, to 318,955st from 301,529st. But the mine had more than halved its output in the third quarter. The firm expects Shoal Creek to "return to normal production levels" in the second half of 2020 once an upgrade of the main line conveyor system is completed. Peabody's and Arch's metallurgical coal operations remain separate while the two companies consolidate their thermal assets.

China's decision to grant tariff exemptions for US coking coal imports from 2 March has been welcomed by US mining firms and offered support to prices. The daily assessed Argus high-vol A fob Hampton Roads price stands at a year-to-date high of $140/t today. But optimism has been somewhat tempered by current difficulties discharging imported coal at China's ports and uncertainty over global seaborne coking coal demand amid the coronavirus outbreak.

By Brendan Kjellberg-Motton

Major US mines coking coal output '000 st