Coronado Coal expects the impact of the US-China trade wars will push its revenue lower and its earnings below the bottom end of its guidance range.
With the trade negotiations remaining unresolved, China has not yet granted relief on tariffs.
Coronado had to cease its shipments to China from its Buchanan operation in Virginia, the United States in September. This further increased company inventories rather than selling at depressed prices.
Europe and Brazil were also showing subdued demand for metallurgical coal, according to Coronado managing director Gerry Spindler.
The benchmark price for metallurgical coal in the 2019 fourth quarter has deteriorated from $160 per tonne during Coronado’s half-year result announcement, to $140 in September and finally to $130 per tonne range.
Coronado now anticipates its operating costs to be at the top end of the guidance range, and its earnings before interest, tax, depreciation and amortisation (EBITDA) to fall below the bottom end of the range of the prior guidance of $US687–$737 million ($1.01–$1.08 billion).
This guidance has reflected a 6.8 per cent reduction to the lower end of Coronado’s previous guidance range of $US737–$807 million.
Spindler said global economic conditions remained uncertain, and this had continued to impact pricing, markets and trade for metallurgical coal.
“Although current market conditions are challenging, the long-term demand fundamentals for high quality metallurgical coal are robust, and our expansion plans to grow production remain unchanged,” Spindler said.
“Our low-cost operating structure and balance sheet capacity also means we are better prepared that most of our peers to withstand these weaker market conditions and respond to growth opportunities as they emerge.”
Coronado Coal is not alone in having its metallurgical coal operations impacted by global economic conditions.