"Highway to hell" for coal, Russian Railways and economy

Alexander Titov, Head of the Global Oil Market Sector at the Energy Department of the Institute for Energy and Finance, commented to Vgudok on the changes in Russian coal exports.

Exports of one of the most in—demand fuels from Russia have significantly decreased: by the end of 10 months, the drop was 10% - up to 147 million tons year-on-year. According to Alexander Titov, the main reduction in exports fell on supplies to Turkey and India. The reason is a decrease in exports through the ports of the Azov-Black Sea basin and North-West Russia, from where significant volumes went to buyers from these states.

"In January-May, low exports from the Azov-Black Sea basin were rather explained by high transshipment rates in Taman, but in the summer there were difficulties with approving applications for passage through the Russian Railways. Shipments to the Baltic Sea in recent months have also been a problem, rather, on the part of Russian Railways, especially on the West Siberian Railway. As a result, exports through the Azov-Black Sea basin fell by 56% to 10 million tons in 9 months, and through the ports of the North-West — by 15% to 38 million tons. The second reason is relatively low prices in the West, which reduces the profitability of exports for coal miners," Mr. Titov told Vgudok.

According to Alexander Titov, if we take energy coal of 6000 kcal/kg, then spot prices in the Baltic are about $90/t, in Taman — about $95/t, and in the Far East — $107/t. For comparison, the price of South African coal is $110 /t.