February 25, 2020 / 2:17 AM / a month ago

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

Feb 25 (Reuters) - 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 $305.5 million, higher than the $209.4 million posted in the year-ago period as the miner managed to rein in costs, but lower than the $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% at A$1.795, as of 0214 GMT. Earlier in the session, stock hit a record low of A$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% 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.

$1 = 1.5090 Australian dollars Reporting by Shruti Sonal in Bengaluru, Editing by Sherry Jacob-Phillips

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