The chief executive of Europe's largest coking coal producer, Poland's Jastrzebska Spolka Weglowa (JSW), said Monday the current high benchmark price is a one-off and would not necessarily be reflected in contracts with its customers.
"The observed growth in the coking coal price is not causing us to change our financial plans because we believe the recent price change is short-term and results from one-off events in the world, above all in Australia and China, such as weather conditions and logistical problems," Tomasz Gawlik, told reporters at a meeting in Katowice, the state news agency PAP reported.
China's coking coal production has fallen by more than 10% so far this year after the government ordered mines to reduce output.
Gawlik said he saw no corresponding trend in steel prices.
"There is no significant increase in prices on the steel market, mills are working at 75% of their capacity. As far as trends in the whole sector go, from coking coal, through coke to steel, it's only in the case of coking coal that we see significant price change. There is very minimal change in the remaining elements, so in our opinion, this is not a permanent trend but one-off events," he said.
Benchmark coking coal prices have rebounded in the second half of this year with the fourth quarter price set at $200/mt, and Gawlik said JSW is negotiating its contracts with customers.
"The fact that benchmarks were set at such a high level does not mean that clients fully accept this situation," he said.
Gawlik said the company, which has been badly affected by earlier low coking coal prices -- resulting in the company recording a Zloty 148 million ($37.3 million) net loss in the first six months of this year -- still planned to issue bonds worth Zloty 300 million and new shares worth Zloty 500 million this year to raise capital in 2017.
