Australia's Coronado warns coronavirus to hit steel demand; shares tank

[BENGALURU] Coronado Global Resources Inc warned on Tuesday that the coronavirus outbreak would weigh on steel demand in China as the Australian coal producer reported a lower-than-expected annual earnings, sending its shares to an all-time low.

Coronado said it expects steel production in China to be curbed in the near-term as quarantine measures imposed by the Chinese government impacts demand from the residential and infrastructure construction sectors.

"The coronavirus is forecast to impact short-term steel demand in China. A stimulus package is expected to be implemented once the outbreak is contained," Coronado said, adding that steel demand is expected to recover.

The Brisbane-headquartered miner also posted a lower production outlook for 2020 after a fatality at its Australian operations in January.

Coronado's underlying net income came in at US$305.5 million, higher than the US$209.4 million posted in the year-ago period as the miner managed to rein in costs, but lower than the US$310 million forecast by UBS.

The Australian company also posted a more conservative final dividend of 2.5 cents, compared with the 5 cents forecast by UBS.

The metallurgical coal miner sees 2020 production in the range of 19.7 million tonnes to 20.2 million tonnes, lower than the 20.2 million tonnes posted a year earlier.

Shares of Coronado were down nearly 1 per cent at AUS$1.795 (SUS$1.660, as of 0214 GMT. Earlier in the session, stock hit a record low of AUS$1.700.

Market conditions for metallurgical coal, a primary ingredient for steelmaking, weakened last year as a result of a protracted trade spat between the United States and China.

The company's full-year revenue fell 3.5 per cent amid lower commodity prices in the second half of the year. Sales volume for the period declined to 19.9 million tonnes from 20.1 million tonnes a year earlier.

REUTERS