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Pulse of Charcoal - July 10
Coal industry - actual figures and facts. Partner project of the Modern Analytical Agency (CAA) and the EastRussia portal
Mining, logistics, prices, export - all that the coal industry in Russia and in the world lives on is concise and to the point - in a new partner project of the Modern Analytical Agency (CAA) and the EastRussia portal
A brief overview of the global coal market
Steam coal indices in Europe amounted to about USD 125 / t. The key drivers of the positive dynamics of coal prices are the lack of supply of export material in the European market and high average daily temperatures in a number of EU countries. According to experts, the reduction in coal exports from Colombia, as well as the reorientation of coal supplies by some Russian exporters from West to East support coal quotations in Europe. Seasonal electricity demand in the EU contributes to increased consumption of material by coal-fired power plants, which favorably affects prices. Low volumes of wind generation in the EU at 670 GWh (-432 GWh by May 2021) provide additional support to the quotes.
Limited supplies of South African export material following an accident on a rail link between the port of Richards Bay and South African coal-mining provinces last week pushed coal prices above $ 115 / t. According to experts, despite the decline in demand from Indian enterprises for South African material, the indices of coal of South African origin will rise in the short term due to additional restrictions on supplies caused by the plans of the South African rail operator Transnet to begin repair work in August.
South African state-owned power generation company Eskom has announced talks with major financial institutions to raise $ 10 billion in exchange for shutting down its coal mines. According to the management of Eskom, the company may suspend the operation of coal assets and invest part of the funds in renewable energy in order to reduce CO2 emissions. Eskom currently emits about 213 tonnes of CO2 equivalent per year. Nevertheless, experts are skeptical about Eskom's investments in green energy in South Africa, since the company's current debt reaches $ 27 billion, and the funds raised will be primarily used to pay off the debt.
The resumption of operation of many mines in China after the end of public holidays led to a decrease in the price of coal 5500 kcal / kg NAR domestically produced in the port of Qinhuangdao below $ 152 / t.
Lack of Australian coal on the market following the recent accident on a branch of the railway line between the Dalrymple Bay coal terminal and the coal-mining provinces of Australia, as well as increased demand from Japan and Taiwan, are driving the quotes above $ 140 / t. Japanese generators are stepping up their coal purchases following a local government order to secure sufficient imported material amid growing demand for electricity.
The worsening epidemiological situation and torrential rains in southern Indonesia are limiting the production and export of Indonesian coal, supporting the 5900 GAR coal indices at over $ 120 / t.
Despite the increase in coal production in Indonesia in January-June 2021 to 292.8 million tons (+7.2 million tons by January-June 2020), market participants believe that due to the ongoing outbreaks of Covid-19, local producers do not will be able to export significant volumes of material to the market in the medium term.
The shortage of coking coal of Australian origin in the APR market and the seasonal demand of metallurgical plants contribute to the growth of the indices above 205 USD / t. The high price of metallurgical coal in the domestic market of the PRC is forcing Chinese companies to increase purchases of Australian coking material from traders in Japan and South Korea, which has a favorable effect on quotations.
FAS and the Ministry of Energy can set the indicator of coal sales on the exchange at 10% of the monthly sales volume
On July 06, 2021, during a meeting of the Exchange Committee of the Federal Antimonopoly Service (FAS), the Ministry of Energy (Ministry of Energy) proposed to establish a mandatory minimum volume of sales of coal, brown coal and anthracite on the exchange. According to the proposal, the minimum volume of coal traded on the exchange will be 10% of the monthly aggregate volume of material traded in Russia. The draft proposal affects coal grades B, D, DG, G, GZh, Zh, SS, T and A. According to the FAS representatives, this measure will help stabilize prices for thermal coal on the domestic market of the country.
In connection with the growing export indices of coal, Russian producers supply more energy material to international markets by reducing supplies to domestic consumers, thereby increasing the energy deficit in the domestic market. In turn, Russian consumers, fearing further strengthening of domestic prices, began to buy coal for the new heating season in advance, which contributes to the further growth of coal prices on the domestic market.
At the moment, coal is already traded on the St. Petersburg International Commodity Exchange (SPIMEX), but, unlike oil products, the mandatory minimum amount of sales on the exchange as a percentage of material sales has not been established.
In December 2019, SPIMEX launched a pilot project on steam coal trading. During the first auction, more than 1.5 thousand tons of D-grade coal were sold.
Rostekhnadzor has suspended work at the Bungurskiy-Severny open-pit mine
On June 29, 2021, work at the Bungurskiy-Severny coal mine in Kuzbass was suspended for three months. The decision was made following the results of an audit by the Federal Service for Environmental, Technological and Nuclear Supervision of Russia (Rostekhnadzor) from 08 to 29 June.
In accordance with the inspection materials, Rostekhnadzor revealed non-compliance with safety measures at the coal mine, which could lead to an accident and endanger the lives of miners.
In 2020, 1.6 million tonnes of T grade coal was mined at the Bungurskiy-Severny coal mine (-0.3 million tonnes by 2019). The key owners of the enterprise are Fanamery holdings ltd (50%) and the transport company KuzbassTransCement (33%).
Russian Railways proposed to build a new railway line for exporting coal from Yakutia
On July 7, 2021, during a meeting between Vladimir Putin and the Cabinet of Ministers, the head of Russian Railways Oleg Belozerov proposed to build a new railway line, separated from the Baikal-Amur (BAM) and Trans-Siberian (Transsib) railways, to increase the export of coal from Yakutia through the eastern ports.
The proposal was initiated by Elgaugol, owned by Albert Avdolyan's A-Property and Rostec State Corporation. According to Oleg Belozerov, the new line will reduce the load on BAM and Transnibs and will allow key coal exporters in Yakutia to increase export supplies. It is expected that the line's throughput capacity will reach 50 million tons per year. The village of Chumikan, located on the shores of the Sea of Okhotsk, is considered as the end point of the branch.
There are two large coal producers in the Far East - Kolmar, owned by Anna Tsivileva, and Elgaugol. These companies supply coal along the Trans-Siberian Railway and the eastern part of the BAM. Kolmar and Elgaugol intend to increase production volumes, as well as existing port facilities. The throughput capacity of the new coal terminal VaninoTransUgol (VTU), built by a subsidiary of Kolmar, is 12 million tons per year. Transshipment volumes will increase to 24 million tons by 2022. Albert Avdolyan's A-Property also plans to build a coal terminal in the port of Vanino with a capacity of 2024 million tons of coal per year by 30 and an enrichment plant on Elga with a capacity of 32 million tons. stage (end of 2021) and 45 million tons at the second stage (2023).