Polish coal company Jastrzębska Spółka Węglowa predicts further price increases in Europe
The European Union needs coking coal, so it imports about 40 million tons of fossil fuels annually. Coking coal is also a raw material used to create a green energy infrastructure.
Without coking coal, there would be no offshore and onshore wind farms. It takes over 400 tons of steel to build one large wind turbine tower. Its smelting requires about 140 tons of coke plus 200 tons of coking coal. Currently, there are no alternative and economically viable technologies for steelmaking without the use of coking coal.
Despite the ongoing work to replace coking coal with hydrogen, blast furnaces remain the dominant steelmaking technology globally. Thus, coke obtained from coking coal will remain the main material in steelmaking for a long time to come.
“In general, the economic situation on the market is now very favorable for Jastrzębska Spółka Węglowa. Coking coal prices from Australian mines have reached more than $ 350 per tonne. In China, you pay $ 450 per tonne of coking coal, "says mBank analyst Jakub Shkopek in interview to WNP.PL. “We are seeing dynamic growth in coking coal prices on the market,” he adds.
This is also influenced by the fact that safety checks are carried out in mines in China, which means that some mines are closed for a certain period of time. In addition, cyclones have led to delays in sea shipments in the Atlantic region.
“In general, the demand for coking coal now exceeds the supply of raw materials on the market. Before the boom, no one invested in expanding coal mining capacity. And now there are consequences, ”emphasizes Jakub Shkopek.
It is known that investments in the mining industry are long-term and one cannot expect an effect overnight. In addition, iron ore prices fell. And even with high coking coal prices, steelmakers can benefit from high margins. There are supply problems, so high coking coal prices may persist until at least the end of 2021.
The Board of Jastrzębska Spółka Węglowa signed on Monday, September 13, a wage agreement with union representatives. It was also agreed that a one-time premium would be paid. Thanks to this, the collective dispute that began in June of this year was terminated.
The parties to the agreement have agreed that from September 1, 2021, new tables of base salary rates will be introduced, exceeding the current ones by 1.6%, which, together with an increase in base wages by 3.4% from July this year, will increase wage rates fees by 5%.
The annual demand in the European Union for coking coal is over 53 million tons, of which only 17 million tons of this raw material comes from the EU, including 11.6 million tons from Poland, where this coal is mined at Jastrzębska Spółka Węglowa. The rest is imported, inter alia, from Australia, USA, Canada and Mozambique.