Glencore Xstrata Decreases Coking Coal Production

Author: Paul Ploumis07 May 2014 Last updated at 07:03:09 GMT

CANBERRA (Scrap Monster): Glencore Xstrata has started decreasing its coke production in Australia and going to give more focus on its thermal coal mines.

The depreciation of coking coal price has become worse in recent times by the increase in production from Queensland and some Anglo American and companies like BHP Billiton and even West farmers have been boosting the steel ingredient exports.

The tough environment has urged Glencore to decrease its production of coke. This decision is somewhat logical for Glencore as its Australian mining unit has more thermal coal mines than coking coal mines. The increased in production of coking coal from Queensland has also made some impacts on North American producers too. They also cut back about 14 percent of supply from the continent i.e., 4 percent of global supply, because the bench mark price of low volatile hard coke attained $US 105 per tonne during mid March.

The contract prices are higher than spot prices which are averaged about USD 135/t. However this was still 15 percent lower than the March quarter 2013. The US and Canadian producers also cut the production about 13 million tonnes out of the trade since March. According to UBS analyst Tom Price, there is more cut down in production from the US and if it continues like that in the coming months the coal prices could improve.

Glencore Xstrata plc is an Anglo–Swiss multinational commodity trading and mining company, which has zinc, copper, nickel, cobalt and silver mining in Australia.