Russian coal companies will increase coking coal prices for the second time since the beginning of the year. The prices will grow by 30-40%, to $120-130 per ton. According to the analysts, this is the fair price, as in global markets coal is traded at $180 per ton since last year and the production volumes of the main consumers, metallurgical companies are growing. At he same time experts are not sure that steel prices will grow to the extent which could allow the metallurgists shifting the expenses growth to their consumers.
“Raspadskaya” is planning to increase coking coal prices averagely by 30% to 3.6 thousand ruble per ton ($120 FCA, excl. shipment expenses). “If “Raspadskaya” increases the prices, other coal companies can do the same”, - said a source in Russia.
The prices increase will be the second after the slump to the bottom last year. Russian coal companies increased coal prices by
50-60% in the Q4 2009 (“Belon” - by $100 per ton, “Raspadskaya” - by $90 per ton). The increase was expected by the analysts. The 30-40% growth in the beginning of 2010 was forecasted in Oct. 2009.
Coking coal prices increase can be explained by positive dynamics of raw materials prices in world markets. Average sales price of “Raspadskaya” in the Q4 2009 was $88 per ton (about $130 incl. shipment expences). At the same time coking coal prices in world markets, for example in Australia, grew to $180 per ton incl. shipment in mid. Dec. In Jan. the contracts are concluded at $190-200 per ton FOB Australia; sometimes the prices reach $220 per ton.
Since the last increase the products of coal consumers also increased. HRC steel grew by 10%, CRC steel grew by 13%, export slab prices increased by 15%.
Coal prices increase can also be explained by metallurgy output growth. In Dec. steel output amounted 5.5 mio tons. At the normalized average level of previous years 6 mio tons. The load of key metallurgical plants’ capacities is 95-100%. 10% steel output increase is forecasted for n 2010, which can cause further growth of raw materials prices. But Russian metallurgists will cover it by steel prices increase, which can amount 10-20% in 2010 depending on the product, analysts say.
The metallurgists themselves do not see the reasons for 30% prices increase. Acxcording to the source in a metallurgical company, the situation differs from that in Sep. 2009 when the first growth happened. “That time the metallurgists did not have coal stockpiles; coal suppliers did not have any difficulties with coal transportation to the Far east ports, which spoil their export increasing plans today”, - the source said. It will be not easy for metallurgists to shift raw material prices increase to their consumers, says the analyst from Unicredit: steel prices in world markets are not stable.