Russian mining and steel group Mechel's coking coal and PCI sales volumes fell in the first quarter, while pricing benefited from a strong benchmark reference in seaborne markets for the period.
"Despite the slump in spot prices for premium coking coal, which reached $150-$170/mt in February, Q1 2017 benchmark FOB Australia was $285/mt, which enabled us to continue selling some of our coal for fairly high prices," Mechel CEO Oleg Korzhov said in a company report Wednesday.
Mechel said Q1 coking coal product sales fell 10% on the year-earlier period to just under 2 million mt.
External coking coal sales dropped 15% to 1.214 million mt.
Mechel exported all available stockpiled coal to Asia Pacific markets in Q4, depressing Q1 sales volumes. This was done at a time of higher spot and contract prices, and to meet clients' requests, it said.
Further, Q1 concentrate sales fell due to a temporary change in the mining structure at the Neryungrinsky Open Pit mine, where the share of steam coal increased and coking coal's share decreased, it added.
PCI coal sales, all to external customers, fell 34% to 341,000 mt in Q1, with Japan and South Korea accounting for 300,000 mt of the total.
Mechel boosted total coke sales 2% to 722,00 mt due to higher European demand in Q1, seen in sales to Germany and Turkey.
There was an increase in third-party sales of 1% year-on-year to 235,000 mt, while larger gains were made over the preceding period's external sales of 183,000 mt.
Anthracite sales increased 7% to 448,000 mt, with external sales rising at 7% to 385,000 mt. The increase in anthracite sales was due to demand from Asia, with Mechel stating it was redirecting anthracite sales from Europe to Asia due to more profitable conditions in the region.
Mechel increased thermal coal sales to Asia Pacific in Q1 by 5% and in particular to China -- by 22% quarter-on-quarter. This helped counter a decline in other regions, with external sales at 1.36 million mt, down 7% from Q1 2016, and 2% lower than in Q4 2016.
"A major shipment to China [due to be booked in Q1] has been put off until the next accounting period as the cargo vessel was late arriving to port," it added.
