Coronado declares coal price floor in a ‘dire’ steel market

afr.com:

The chief financial officer of Queensland coal miner Coronado, Gerhard Ziems, says coking coal prices are close to a floor amid “dire” global steel markets deflated by China’s weakening trade pulse.

A 14 per cent rise in the cost of producing each tonne of coal and a 22 per cent decline in the price received by Coronado drove the miner’s half-year profit down to $US199.2 million ($305 million) on Tuesday, a 65 per cent slide.

Coronado mines coal at Queensland’s Curragh mine. Alamy

Weak demand for steel in China is tipped to send iron ore prices below $US100 a tonne later this year, according to Goldman Sachs – sufficient for a bear market in Australia’s No.1 export. China’s exports fell for a third straight month in July, according to trade data on Tuesday, indicating waning demand, while imports fell for a fifth-straight month.

Prices for top-quality hard coking coal remain relatively high near $US247 a tonne, and Mr Ziems said the strength in the price was notable given the global steel market was in a poor state. “It looks pretty dire, one of the worst steel markets I have ever seen,” said Mr Ziems on Tuesday.

“Europe is a basket case at the moment, and what matters is Asia – and for some reason, Asia is not very active either.”

Mr Ziems pointed to youth unemployment rates and housing data in China as evidence that the world’s second-largest economy would have to stimulate soon, giving him hope that the Chinese construction sector would rebound.

“China definitely has to do something about its economy … there needs to be some stimulus, particularly in the real estate sector in China,” he said. “Despite all of this, we see met coal prices at $US247 a tonne.

“I would say $US230 a tonne is probably the floor [in coking