BMA strikes were good for us: Yancoal

The industrial dispute between BMA and its workers has reduced Australian coal exports and helped boost demand in the weakening market, according to Yancoal.

In its half year results presentation yesterday Yancoal said while coal prices had dipped this year BMA's lower production had helped boost the market.

"Metallurgical coal prices have been declining since mid 2011 as demand in several of the major consuming countries fell, however prices firmed in Q2 2012 when the BMA industrial dispute reduced supply to the market," it said.

But Yancoal also said BMA looked to be approaching a resolution with unionised workers in Queensland, which would end the small rally in prices.

Looking to the near future Yancoal said it expected demand for coal would remain uncertain.

"In Q3 spot prices for all metallurgical coal types are weakening as resolution of the BMA industrial dispute is expected shortly…" it said.

"In the second half Yancoal expects the metallurgical coal prices to remain weak and volatile."

Looking further into the future Yancoal said it expected the market to respond positively to job cuts in the wider industry, with demand strengthening again next year.

"Indications of production cutbacks in a number of other countries (workers being laid off in Australia) has provided some short term stability in the price," it said.

"As excess stocks are consumed and production cuts take effect the thermal coal price should respond positively in the next year."

Outside market predictions Yancoal said it was considering "all options" to reduce costs amid the weak market.

It also said it was reviewing all expansion plans, with coal sales declining over the first half of 2012.

Nevertheless Yancoal said coal output this year was 31 per cent higher than the first half of 2011, and it was on target to beat last year's production results.

Image: Yancoal

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