Teck Falls on Forecast for Weak Metallurgical Coal Market

Teck Resources Ltd., the second-largest exporter of seaborne coal used in steelmaking, fell the most in three months after forecasting weakness in coal markets until at least the middle of the year.

Teck dropped 4.5 percent to C$34.99 at 10:41 a.m. in Toronto, after earlier declining 5 percent, the most intraday since Nov. 7. Shares of the Vancouver-based company have tumbled 16 percent in the past 12 months.

“The medium-to-longer-term fundamentals for steelmaking coal are quite favorable, although the recent weakness in the seaborne steelmaking coal market is expected to persist for at least the first half of 2013,” the company said today in a statement reporting its fourth-quarter results.

Net income fell to C$145 million ($145.4 million), or 25 cents a share, from C$637 million, or C$1.08, a year earlier, according to the statement. Excluding one-time items, profit was 61 cents a share, more than the 48-cent average of 22 analysts’ estimates compiled by Bloomberg. Sales dropped to C$2.73 billion from C$2.97 billion, more than the C$2.55 billion average of 13 estimates.

“Sales to China in the fourth quarter reached a record high level,” Teck said. “However, the ratio of Chinese sales to total sales in 2013 is expected to decline to be similar to what was experienced in the first three quarters of 2012.”

Teck shares are down today because of the company’s outlook for the metallurgical coal market, John Hughes, an analyst at Desjardins Securities Inc. in Toronto, said by e-mail.

China, the world’s biggest steelmaker, imported 2.64 million tons of metallurgical coal from Canada in October and November, according to the latest figures from the Canadian government, more than double the year-earlier total. Chinese imports from Australia, the largest exporter by sea, also rose, according to data compiled by Bloomberg.

Teck’s coal sales in the fourth quarter were 6.42 million metric tons, 16 percent more than a year earlier, according to the statement.

“The increase in sales volume predominantly reflects strong demand for coal delivered to China, partially offset by lower demand in our traditional markets,” Teck said in the statement.

BHP Billiton-Mitsubishi Alliance, a joint venture between Australia’s BHP Billiton Ltd. and Japan’s Mitsubishi Corp., is the biggest exporter of seaborne metallurgical coal.