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MOSCOW, Nov 29 (Reuters) - Metals and mining group Mechel posted a third-quarter net loss of 2.8 billion roubles ($43 million) as a surge in the price of its main product coking coal came too late to bolster its earnings but will boost its fourth quarter, it said.
Prices for coking coal - a key component in steel production, - have more than doubled since July on expectations of lower supply, sending Mechel’s shares to three-year highs.
Mechel, Russia’s second-biggest coal producer after market leader Evraz, said on Tuesday even though spot coking coal prices were currently at more than $300 per a tonne this had not supported its financial earnings in the third quarter.
“The rapid growth of coal prices, which began in mid-summer, didn’t have time to make a full impact on the third quarter’s financial results,” Mechel Mining Management Chief Executive Officer Pavel Shtark said.
“We saw this hike’s reflection in our contracts only by the very end of this reporting period,” he said. “The current favourable market situation will definitely be reflected in the results of the fourth quarter and future periods.”
Chief Executive Oleg Korzhov said he hoped coking coal prices would remain at current levels into the first quarter of next year.
Mechel, which was hit by a collapse in global steel prices, has been in lengthy talks with creditors to restructure its debts and is yet to sign final debt restructuring deals with all the creditors.
Mechel said its coking coal sales fell 10 percent in the third quarter to 2 million tonnes, but it had increased sales to China, Japan and India in the period.
Steel and coal production both fell 5 percent quarter-on-quarter to 1 million and 5.6 million tonnes respectively, the company said.
Mechel’s third-quarter core earnings totalled 15.9 billion roubles, up slightly from 15.7 billion roubles in the previous quarter. Revenue slipped from 68 billion roubles to 66.2 billion. The company made a net profit of 8 billion roubles in the second quarter of this year. (Reporting by Jack Stubbs; Editing by Jane Merriman and Alexandra Hudson)