Polish miner JSW's met coal, coke prices remain low in Q2

London — Poland's JSW SA said coking coal and met coke prices remained low in the second quarter while stable from Q1, as the COVID-19 pandemic suspended mining operations in Poland and hit miner OKD in the Czech Republic.

JSW said coking coal prices and blast furnace coke prices quoted in Europe were steady, while the group's average Q2 met coke prices sold fell 3%, the company said in a July 14 update.

Coking coal and coke prices fell 4% and 7% quarter on quarter, respectively, when converted from zlotys to dollars, it said.

JSW sold 2.96 million mt of coal in Q2, outpacing production of 2.6 million mt -- of which 2.1 million mt was coking coal.

Total coal output missed quarterly production targets, falling 36% quarter on quarter and 26% year on year, the company said. Coal sales fell 11% quarter on quarter and 7.5% year on year.

JSW's Q2 met coke sales fell to 650,000 mt, from 1.04 million mt in Q1, and down 15.4% year on year.

As a major merchant coke producer, JSW's coke has been sold into India and China this year, helping make up for weaker demand in Europe.

JSW has reopened three mining operations, the Knurow-Szczygłowice and Budryk complexes, which were idled over June 9-28 to help contain coronavirus infections.

The mines have a higher ratio of thermal coal to coking coal than other JSW mines, and due to wider steel plant idling in Europe, coal availability remained matched with demand for now, according to a source familiar with the operations.

Smaller coal miner OKD, which sells around half of its coal as met coal, has suspended mining operations at all its mines for at least six weeks from July 3 because of high rates of coronavirus infections at some of its mines.

With stable contract demand from steel mills, JSW expects growing interest to procure coking coals from the region over buyers tapping seaborne imports.

Shipments from Australia and Canada, as well as the US and Mozambique – unless the coal is offered ex-stock from European terminals -- usually require longer trade finance cycles and a timing lag between the price of coal procured with steel sales terms.

Seaborne trade also needs commitments for larger quantities, while smaller railed volumes help European coking coal and coke to add flexibility.

JSW said it follows S&P Global Platts TSI coking coal index, and the Nippon Steel quarterly price formula using two indexes, as well as the semi-soft coking coal index, as referenced previously, in the report.

Lower index prices for premium HCC in Asia this year, with TSI PHCC index at $113.50/mt FOB Australia on July 14, and weak global demand, is putting pressure on the sales margins of European miners, with high underground operating costs.

OKD this month received a government credit injection to weather the suspensions and added costs.