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> Risk factors and threats
> Factors related to the Group’s business and market environment
> Decline or volatility of coal and coke prices
Decline or volatility of coal and coke prices
The major driver of domestic and international coal and coke prices and its consumption are the overall supply and demand for these products. Demand for the Group's key products may be subject to the influences of global economic cycles, political events, force majeure and hinges on the level of demand for coking coal and coke in the metallurgical and coking industry. Price volatility exerts a direct impact on the Group’s operating and financial results.
In the past the Group has undergone material volatility of coking coal prices and the Company is convinced that there is a probability that such volatility will also occur in the future.
The global economic slowdown was reflected in a drastic decline in benchmark prices for hard coking coal, where the price declined continuously from 330 USD/t in Q2 2011 to 170 USD/t in Q4 2012 (-160 USD/t; -48.5%). The Group, which is the leading producer of hard coal in Europe, was seriously affected by this drop. As a result, its average external coal selling price in 2012 was 14.1% less than in 2011.
The average FCA-based price of coke in 2012 was 19.0% less than in 2011. The market trends and the extent of the drop of prices earned by JSW S.A. were comparable to the quoted prices of coke on the European market (according to the Coke Market Report).
