CIS disruption raises prices, climate policy doubts: JSW

Jastrzebska Spolka Weglowa (JSW) says coal and coke supply disruption from the CIS will positively impact demand for its products, while high prices will improve its earnings. The energy crisis could lead to changes in the EU’s climate policy, which could benefit the company’s operations in the medium term.

Given the uncertainty, it is impossible to predict how long the high coal price levels will last, Europe’s largest coking coal miner adds.

As a result of war in Ukraine, coking coal prices have beaten previous all-time highs by $200/tonne, with hard coking coal noted at $660/t, PCI at $650/t and semi-soft at $575/t, as of 8 March. This has been exacerbated by floods on Australia’s east coast, which have paralysed freight activity there.

Coke prices are rising but more slowly than coking coal, with Chinese CSR 64/62 coke noted at $658/t.

The war in Ukraine has not directly impacted JSW’s operations so far. The firm has a contract to supply a Polish company with coke that is shipped to the Ukrainian market, but that supply has been redirected to other markets amid the war, Kallanish notes.

However, there are certain risks of JSW’s business being impacted. One is broken or disrupted supply chains, which could result in limited availability from Ukraine and Russia of raw materials that are indispensable for steelmakers and coke producers. Another is rising energy costs as a result of restricted gas and coal supply from Russia. The third is logistical disruption at ports resulting from increased seaborne imports of raw materials, such as iron ore.

JSW increased merchant coking coal sales 10% on-year in 2021 to 6.9 million tonnes, while coke sales were flat at 3.6mt (see separate story).

Adam Smith Germany