Coal prices may surprise you. There's a lot going on here.

• As the conflict in the Middle East eased, gas prices fell and thermal coal prices also fell.
• The risk to the price development of coking coal and iron ore in the second half of 2025 is the announced cuts in steel production in China.
• The steel market in Europe is also shrinking alarmingly. Consequently, demand for coking coal is dwindling. This is bad news for Jastrzębska Spółka Węglowa, the largest producer of hard coking coal in the European Union and one of the leading producers of coke used in steelmaking.

- Currently, the prices of thermal hard coal in the ARA ports (Antwerp-Rotterdam-Amsterdam) are at the level of USD 105 per tonne - Jakub Szkopek, an analyst at Erste Securities, points out in an interview with WNP.

Thermal coal prices should trend sideways

Recently, there have been slight fluctuations in thermal coal prices. It's worth noting that China experienced heatwaves, which increased demand for coal-fired electricity.

Generally speaking, supply and demand factors, such as weather (heat waves) or modernization of gas infrastructure in Europe, can influence fluctuations in coal, electricity, and gas prices, explains Jakub Szkopek. "In the medium term, however, thermal coal prices should trend sideways. In the case of coking coal, there's definitely more activity," he adds.

Indeed, in mid-July, news emerged in China that the government had increased safety inspections in mines. Coal prices in China skyrocketed from $110 to $160 per ton.

- Currently, the price of a tonne of coking coal in China is around USD 120 per tonne - notes Jakub Szkopek.

However, prices are expected to rise after the Chinese government imposes tough production limits at local coking coal mines.

"The announced cuts in steel production in China pose a risk to the price of coking coal and iron ore in the second half of 2025"

"As for Australian coking coal prices, which serve as a benchmark for Jastrzębska Spółka Węglowa, they currently stand at around $190 per tonne," says Jakub Szkopek. "Therefore, these prices have increased by around $10 over the past month. It's also important to remember that the announced cuts in steel production in China pose a risk to coking coal and iron ore prices in the second half of 2025," adds Jakub Szkopek.

In Europe, the negative message from steel companies continues during the summer holiday season. For example, Salzgitter and Klöckner reported significantly weaker-than-expected results in the second quarter.

- ArcelorMittal Poland, in turn, plans to temporarily close furnace number 2 in Dąbrowa Górnicze j. Poland and Europe are seeing a significant increase in steel imports from Ukraine, in particular ribbed bars - emphasizes Jakub Szkopek.

He also points out that coking coal prices may rise by September if China limits its production.

"The price level of coking coal does not cover JSW's production costs"

"The current price level for coking coal on global markets doesn't cover our production costs," admits Paweł Kołodziej, chairman of the Federation of Miners' Trade Unions of Jastrzębska Spółka Węglowa, in an interview with WNP. "We're dealing with a low dollar exchange rate, and that means we're not financially strapped despite slightly increased production," adds Kołodziej.

He also draws attention to the fact that the shrinking steel market in Europe is also a cause for concern .

"We hear quite often about major steel companies closing their blast furnaces," notes Paweł Kołodziej. "As a result, demand for coking coal, which is Jastrzębska Spółka Węglowa's main product, is decreasing. Unfortunately, the environment isn't helping JSW, and this downturn in the coke and steel markets has been going on for far too long," concludes Paweł Kołodziej.