Coronado shares surge on Q4 result, US outlook
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More news: Shares in Coronado Global Resources jumped in early trading after the coal miner boosted production in the December quarter.
Coronado shares were up 4.9% to 74.5 cents by 10:35am AEDT, making it the top performer across the ASX 200.
Despite reporting a decline in calendar-year revenue, Coronado said it anticipates a rebound in steel demand in 2025. The miner, which supplies coal to steelmakers, noted that the new US government is expected to encourage reshoring and investment in steel-intensive manufacturing.
UBS analyst Lachlan Shaw said that Coronado's Q2 production, costs and realised price all beat consensus estimates, though sales missed temporarily. However, he noted that a soft metallurgical coal market and stable net debt may weigh on the company's returns in the near term.
Coronado revenue slides on bearish China steel demand
The news: Coronado Global Resources reported an uptick in production during the 2024 calendar year, but a decline in group revenue as the coal miner bemoaned a "sluggish macroeconomic recovery" and "bearish sentiment around Chinese steel demand".
The numbers: Coronado reported run-of-mine (ROM) production of 26.6 million tonnes for the 12 months to December 2024, up 4.5% compared to 2023 and up 4.9% versus 2022. ROM production in the December quarter was up 8.8% quarter on quarter to 6.9 million tonnes, with saleable production rising 4.1% to 4 million tonnes.
However, quarterly revenue of $558 million was down 8.3% quarter on quarter, with calendar-year revenue slumping 13.2% to $2.5 billion.
Coronado said lower 2024 revenue was largely driven by an 18.9% fall in coking coal index prices, combined with lower annual US domestic contract pricing, compared to 2023.
The context: Coronado said that coal metallurgical coal prices were "broadly stable" during the December quarter, weighed down by a slow macroeconomic recovery and soft Chinese steel demand.
The miner expects Chinese demand fundamentals to "remain stable" until after the Lunar New Year, contingent on potential additional stimulus measures and clarity on international trade actions from the new US government.
Coronado also said it expects a rebound in steel production in 2025, as well as growth in seaborne markets outside of China. The recovery is expected to be driven by increased industrial activity and ongoing trade measures, mitigating the impact of high Chinese steel exports.
Iron ore and coking coal are used for steelmaking, leading to the commodities' prices relating closely to steel prices.
In the US, Coronado predicts a "significant boost" in steel demand this year, fuelled by an improving economic outlook and policies encouraging reshoring and investment in steel-intensive manufacturing.
The sources: ASX announcement, UBS research
