The Philippines' largest coal producer: record coal prices may have peaked

With the increase in the use of coal in the power sector, coal prices in many parts of the world have recently hit record highs. In response, Semirara Mining & Power Corp., the largest coal producer in the Philippines, Chairman Isidro Consunji predicts that coal prices may have peaked after hitting record highs, but will remain high until the first half of 2022.

"at the current high level of prices, people will overproduce, then there will be oversupply and prices will fall," Consunji said in an interview with the media on Monday. "

The severe shortage of natural gas in Europe ahead of this winter has caused a snowball effect in the global energy market, with many power plants turning to other cheaper fuels such as coal. This has caused coal prices in China and around the world to soar to record levels. The price of coal produced by Semirara has doubled from the second quarter, from $50-$65 a tonne to about $110a tonne, Consunji said.

Semirara's coal production accounts for 90 per cent of total Philippine coal production, about half of which is exported, with 90 per cent of overseas goods sold to China.

Consunji also noted that high-quality thermal coal shipped at the Australian port of Newcastle is unlikely to rise further to $300 a tonne. On Friday, the price of the thermal coal soared to $203.20 a tonne, breaking the record set in 2008. He also said that more supply is expected to enter the market in 5-6 months to ease price pressure.

Semirara expects coal revenue to grow by more than 50 per cent in the fourth quarter. This will help Semirara and its parent company, DMCI Holdings Inc., Consunji said Profits returned to pre-epidemic levels after a sharp decline in performance in 2020.

The company also expects a maximum capacity of 15 million tons in 2021, unlike last year's sluggish demand.

Semirara's share price has climbed more than 70% so far this year, reaching a two-year high. On Monday, the stock closed 7.4% higher at 23.95 Philippine pesos.