Whitehaven optimistic on coal prices

Whitehaven Coal expects thermal coal prices to remain buoyant after cooler than usual weather in northern Asia boosted demand during the March quarter.

The miner on Tuesday said producers had responded to the demand by buying coal rather than building new production capacity, which bodes well for the commodity's prices.

"If this trend (of buying rather than building) continues, then thermal coal prices are likely to remain buoyant," Whitehaven said.

"Respected forecaster CRU has indicated that it expects thermal coal prices to remain above $US80 per tonne for the next five years."

Demand for metallurgical coal in the March quarter was also stronger than expected as steel makers boosted production to take advantage of strong steel prices.

Whitehaven said that rail freight operator Aurizon had indicated that up to 20 million tonnes of rail capacity system capacity is at risk in Queensland and that that a significant portion of that capacity is likely to be in metallurgical coal.

If the rail capacity is withdrawn, prices for metallurgical coal are expected to remain well supported in the next year, Whitehaven said.

Whitehaven said that ROM (run-of-mine) coal production lifted by four per cent to 5.9 million tonnes in the March quarter compared to the prior quarter

Total coal sales, including sales of purchased coal, rose 10 per cent to 5.4 million tonnes .

Whitehaven chief executive Paul Flynn said the March quarter was solid.

"Overall, a very good quarter - that puts us close to our targets for the full year," he said.

Whitehaven's Maules Creek mine in NSW produced a record 2.9 million tonnes of coal in the March quarter - up 11 per cent on the prior corresponding period.

Production surpassed one million tonnes in March.

Mr Flynn says production should continue to rise at Maules Creek towards its 13 million tonnes annual capacity as the company brings in more trucks to shift the coal.

Maules Creek is on track to produce 11 million tonnes of coal for the year, with production in the June quarter to be more than three million tonnes.

Mr Flynn said there was strong interest among potential Japanese investors and customers in Whitehaven's Vickery development project in northwest NSW, and the Winchester South project in Queensland's Bowen Basin.

Whitehaven recently acquired Rio Tinto's 75 per cent stake in Winchester South for $200 million.

Whitehaven shares were 12.5 cents, or 2.9 per cent, higher at $4.405 at 1430 AEST.

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