London — Miner Vale, the biggest producer of metallurgical coal in Mozambique, said Thursday it expects oversupply and weak pricing to continue in 2015 due to more expansion from Australia and its own project in Mozambique offsetting production cuts in the US, Canada and Australia.
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The company noted lower Chinese import demand led Japan to bounce back as the largest seaborne met coal importer after 7% annual growth, and India grew at a faster rate, with oversupply keeping prices stable at a low level for most of 2014.
"Looking forward, we expect the coal market to remain oversupplied in 2015," Rio de Janeiro-based Vale said in an earnings report.
"Despite some shutdowns announced during the year and the slowdown of higher cost producers, total supply grew particularly due to strong volumes coming from Australian mines. The still mild drop in volumes from higher cost producers, who despite closing still had inventories to release, kept prices steady at low levels."
Vale added the production cutbacks may likely become more effective throughout the year, while new supply is being supported by lower production costs due to depressed international oil prices and depreciated currencies in producers' countries against the US dollar.
"From the demand side, the Chinese property market will probably remain lackluster in 2015, weakening overall consumption growth. That said, we expect coal prices to remain weak throughout the year," it said.
Vale has the Moatize mine in Mozambique ramping up this year as a new rail line to Nacala completes, and in Australia, the Carborough Downs mine along with the idled Isaac Plains and Integra Coal mines.
Vale said the Moatize venture's rail line had largely completed while "brownfield section 7, extending for about 500 km, is operational but is still being upgraded...scheduled for completion by Q3 2015," as earlier advised.
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