The difficult life of Russian coal miners: falling demand in China, difficulties with logistics and taxes

Alexander Titov, Head of the Global Oil Market Sector at the Institute for Energy and Finance, commented on the logistical difficulties and the impact of export duties on the Russian coal industry to the Neft and Capital Internet portal.

Alexander Titov explained that in the East, coal prices are higher for Russian exporters than in the West. For this reason, even those who deliver goods for transshipment to the ports of Ust-Luga or Murmansk, often still carry coal by sea to China. Yes, the transport shoulder is clearly larger and more expensive, but it's still more profitable.

"If companies had the opportunity, they would export all coal to the Asian market. But the problem is that as soon as Russian Railways increases the capacity at the Eastern landfill at least a little, it is immediately occupied, and those who wish still remain. It should be understood that Asian markets are now receiving a lot more cargo from Russia. These are not only coal, but also products of the forestry industry, metallurgy, etc. There are also container shipments, which, by the way, are going in increasing numbers and in the opposite direction — from Asia to Russia. As a result, railway communications are overloaded, and there is not enough space for coal for companies," the expert says.

In his opinion, in such conditions, the introduction of even a flexible duty on the export of thermal coal and anthracite will create serious problems for producers. The fee of $4-5 per ton of coal, which now costs, say, $80, is, at first glance, not so much. But, on the other hand, many companies in the industry are now operating at almost zero (and some even at a loss), for them any situation with a shift towards costs is a problem.

"Yes, China has started buying less, but supplies are declining not only because of this buyer. This problem is combined with difficulties in logistics for Russian suppliers, where there are also increased tariffs for Russian Railways by 10%," Alexander Titov summed up.