“Current spot prices are trending in the $US85 to $90 [a tonne] range, although reduced spot market transactions are creating limited visibility into the market,” he said in a company conference.
“The 25% decline since beginning the year has left met coal prices at levels not seen since 2006 and this has certainly impacted the project pipeline.”
He said global steel production had contracted nearly 2% year-to-date which reduced met coal demand while the forecast for steel consumption growth had fallen to just 0.5% for 2015.
“While the nearly 40 million tonnes of supply curtailments announced since 2012 have begun to impact the market, the significant currency decline in major met coal producing regions has affectively muted the supply adjustment process, leaving the market oversupplied,” Doheny said.
“Strong exports from China have also contributed to the oversupply and while stimulus measures could provide a bump to steel reproduction, it’s unlikely that any material increase to met coal prices will occur until further supply comes offline.”
Joy Global posted a net income result of $38.7 million for its second quarter results which was 47% down year-on-year.
The adjusted net income result, which included the impact of restructuring and pension settlement charges, was $57.8 million – 25% down YoY.
Other Q2 results included a 29% YoY fall in bookings to $745 million, a 15% YoY decline in service bookings to $595 million and a 13% YoY slump in net sales to $810 million.
“Compared to the first quarter, we've seen met coal prices drop 21%, iron ore fall 11%, thermal coal fall 8%, and natural gas drop 20%,” Doheny said.
“The combined impact of these forces has created additional headwinds to our business and we're seeing this in our bookings.”
He also said that mining customers were projecting double digit declines in capital expenditure through to 2017.
“We've clearly felt the impact of these measures on our business and continue to make the necessary adjustments to our cost structure to balance near-term downside volatility and our longer term strategic growth objectives,” he said.
“We continue to proactively manage and control the things we can.”
During a question and answer session, the CEO also revealed that Joy Global was open to possible acquisition opportunities in the $100-200 million range relating to the hard rock mining equipment space.
“To accelerate our business into hard rock we need critical components to make that go faster because the new product development just takes a long time.”
