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Effects of China coal ban 'resolving' as price lifts, says Coronado

Business

Coal miner Coronado said the distortion in coal pricing caused by trade bans from China appeared to have been resolved.

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Coronado, which owns the Curragh mine in central Queensland as well as mines in the US, said pricing had increased significantly during the June quarter, to an average $US137 a tonne while in the US the average price was $US178 a tonne, an increase of 17 per cent.

“China’s ban on Australian imports continues and for most of the quarter we continued to see price distortion between the Australian and US price index,” chief executive Gerry Spindler said.

“By the end of June, that distortion had largely resolved itself and we are now generally see index parity between the two regions.”

The news lifted Coronado’s shares by 7 per cent this morning.

However, spot prices remain a fair distance apart. In July, spot prices in the US jumped to $US300 a tonne and above $US210 a tonne in Australia. The US price was at a 10-year high.

Coronado said the global steel demand for the rest of 2021 was forecast to be very strong because of low interest rates, global economic recovery and growing consumer confidence.

“International trade flows to metallurgical coal (used in steel production) have realigned to accommodate the displacement of Australia coal from China with Chinese steel mills continuing to pay a premium fore replacement tonnes,” the company said in its quarterly report.

However, it said prices were expected to moderate this quarter because of lower seasonal steel production in China and lower spot demand in India, but the supply tightness would remain.

Curragh also said exploration at Curragh to define a potential underground reserve continued.

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