TORONTO, Feb 15 (Reuters) - 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.
Harsh winter weather in British Columbia has also hit inventories, production and sales, it said, as railway problems created bloated mine inventories and required production cutbacks.
Steelmaking coal prices more than tripled in 2016 - to more than $300 a tonne from below $80 a tonne - due largely to restrictions by Chinese regulators on domestic production, a spectacular turnaround after four years of declines.
Teck's fourth-quarter realized price was $207 a tonne.
The company forecast 2017 steelmaking coal production of 27 million to 28 million tonnes, but said output may be adjusted depending on demand.
Teck, the world's second-biggest exporter of seaborne coking coal, reported an adjusted profit of C$1.61 per share in the three months to the end of December, ahead of the consensus analyst estimate of C$1.56.
Profit attributable to shareholders was C$697 million, compared with a loss of $459 million in the same period last year. Revenue rose 67 percent to C$3.56 billion.
"We had a very good year in 2016. We came through one of the longest and deepest down cycles our industry has faced and emerged as a stronger company," Chief Executive Officer Don Lindsay said.
Teck recorded a C$222 million charge in the fourth quarter on higher capital costs at the Fort Hills oil sands project in Alberta, of which it owns 20 percent. That is above an earlier forecast of a C$164 million charge.