Dallas, Texas 07/24/2015 (FINANCIALSTRENDS) – Teck Resources Ltd (USA) (NYSE:TCK) is considering further production costs if the pricing environment in the coal sector does not improve. The world’s largest exporter of seaborne coal has already started implementing a string of shutdowns at its metallurgical coal operations in Canada as the global market continues to be hit by an oversupply.
The company has said that its coal production for the third quarter will be down by 22% as a result of the closures. Teck Resources Ltd (USA)(NYSE:TCK) saw its profit for the quarter ending June 30 dip by 21% as coal prices hit lows of $95 per metric ton representing a 14% drop from last year same period levels. The company says it has signed agreements with most of its customers to supply them with the steelmaking ingredient at a benchmark price of $93 a ton
Further production cuts could be in the offing in the fourth quarter should pricing of coal not improve in the third quarter. Coal production in the third quarter should drop by 1.5 tons to 5.7 tonnes as the company projects sales in the range of between 6 million and 6.5 million tonnes.
Impact of China Slow Down
Teck Resources Ltd (USA) (NYSE:TCK)’s prospects in the industry have mostly been hurt by a slowdown in China which is a key marketplace. A glut of new supply from Australia has only resulted in pricing pressure as global markets gets hit by an oversupply of the commodity
Despite the ongoing turmoil in the industry, Teck Resources Ltd (USA)(NYSE:TCK) was still able to post better than expected second quarter earnings that beat estimates mostly as a result of lower oil prices that resulted in low energy costs. Revenue came in at $1.54 billion. With prices of commodities at all-time lows the company has resorted to cost cuts.
Teck Resources Ltd (USA)(NYSE:TCK) has already offloaded its future gold output at the Carmen de Andacollo copper mine for an upfront payment of $525 million from Royal Gold Inc.