TORONTO – Canadian miner Teck Resources Ltd reported a better-than-expected quarterly profit on Wednesday, lifted by a surge in the price of coal for steelmaking, but said weaker demand in recent weeks was eroding prices and sales.
Teck, the largest producer of steelmaking, or coking, coal in North America, said customers appear to be drawing down inventories following a fourth-quarter buying binge, sparked by global supply worries that were ultimately unfounded. The Chinese New Year holidays also crimped demand.
Shares of the Vancouver-based company, which also mines copper, gold and silver, were down 4.3 percent at C$31.27 in early trading. Teck forecast steelmaking coal sales of approximately 6 million tonnes in the first quarter, down from 7.3 million tonnes in the fourth quarter.
It has reached agreements with the majority of its coal customers for the first quarter, based on a quarterly benchmark price of $285 per tonne. Since that benchmark was set in early December, spot prices have plunged to about $155 per tonne currently, it said.
Teck expects an average realized price in the first quarter of about 70 percent to 75 percent of the $285 per tonne benchmark.
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