Teck shares slide on coal demand woes despite earnings beat
By Susan Taylor and Nicole Mordant
TORONTO/VANCOUVER (Reuters) - Canadian miner Teck Resources Ltd (TECKb.TO: Quote) reported a better-than-expected quarterly profit on Wednesday, lifted by a surge in the price of coal for steelmaking, but weaker demand at the start of the year spooked investors, sending its shares lower.
Teck, North America's largest producer of steelmaking - or coking - coal, said that inquiries from buyers had picked up recently and that it expects sales to be weighted toward the second half of this quarter after a slow start.
"I actually feel much better today than I did three weeks ago," Teck Chief Executive Donald Lindsay said on a conference call.
Teck blamed the weaker start on customers drawing down coal inventories following a fourth-quarter buying binge, sparked by global supply worries that were ultimately unfounded. The Lunar New Year holidays also crimped demand in Asia.
Shares of the Vancouver-based company, which also mines copper, gold and silver, were down 9 percent at C$29.70 in mid-afternoon trading. It was the best-performing stock on the Toronto Stock Exchange in 2016.
Teck has reached agreements with the majority of its coal customers for the first quarter, based on a quarterly benchmark price of $285 per tonne.
But since that benchmark was set in early December, spot prices have plunged to about $155 per tonne. Teck expects an average realized price this quarter of about 70 percent to 75 percent of the $285-per-tonne benchmark.
Teck forecast first-quarter steelmaking coal sales of approximately 6 million tonnes, down from 7.3 million tonnes last quarter. Continued...