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Pulse of Charcoal - July 24
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
Last week, steam coal quotes in Europe once again renewed their 10-year highs, exceeding $ 135 / t. Coal prices in the EU are supported by a complex of factors:
• shortage of coal on the European market, partly due to the low supply of Colombian exporters;
• an increase in spot prices for electricity in a number of EU countries amid recovery in business activity after the pandemic and high average daily temperatures in some regions of Europe;
• an increase in the price of gas on the TTF platform to 36.1 euros / MWh (+1.0 euros / MWh by 01.07.2021) and a decrease in prices for CO2 emission quotas to 51.2 USD / t. (-6.4 USD / ton by 01.07.2021);
• limited supplies of export coal from South Africa (see below).
The scheduled maintenance of the railway connecting the coal-mining provinces of South Africa and the port of Richards Bay, which continues until July 26.07.2021, 125, limits the volume of South African coal exports and supports indices above $ 3.0 / t. The port of Richards Bay, which was previously suspended due to civil protests in the country, is now operating in a restricted mode amid increased security measures. According to market participants, the situation is also exacerbated by the shortage of workers in the port and on the railroad due to their participation in civil unrest. Coal reserves at Richards Bay terminals decreased to 0.3 million tons (-14.07.2021 million tons to XNUMX).
Coal prices of 5500 kcal / kg NAR of domestic production in Qinhuangdao port exceeded $ 157 / t. Heavy rains in China paralyzed the work of a number of large coal mines and the railway connecting large coal deposits and the export port of Qinhuangdao, which supported the quotes. Due to a decrease in coal shipments to the port, stocks of material at Qinhuangdao terms have reached 5-year lows.
The increase in demand for energy material from Australia in the Asia-Pacific region continues to strengthen the Australian coal indices above $ 160 / t. The heat in Japan, as well as the decree of the Japanese government to increase the volume of electricity generation in the country during the Olympic Games from 23.07.2021/08.08.2021/XNUMX to XNUMX/XNUMX/XNUMX, have a favorable effect on the country's demand for imported coal.
Last week, several Asian generators entered into large contracts for the supply of coal from Australia, pegged to the FOB Newcastle Index, to mitigate the risks of volatility in energy material spot prices.
A number of large deals by Chinese generating companies with a deferred supply of coal from Indonesia in August, as well as demand from some coastal CHP plants in India amid declining inventories, strengthened the quotes for the Indonesian material above $ 102 / t. In addition, the unstable epidemiological situation and, as a result, the closure of a number of mines in southern Indonesia reduce coal exports, supporting the indices.
Despite the wait-and-see attitude of some large metallurgical companies in the APR market with the expectation of a possible decrease in indices, limited supplies of coking material from Inner Mongolia to the Chinese market are forcing Chinese steel enterprises to buy Australian metallurgical coal from Asian traders, which supports coal quotations from Australia above $ 210 ./T.
Train collision led to stoppage of coal supplies from Elga
On July 19, 2021, as a result of a train collision on the Ulak-Elga section of the Baikal-Amur Mainline (BAM), supplies from the Elginsky coking coal field developed by Elgaugol, a subsidiary of Albert Avdolyan's A-Property and the state corporation Rostec, were suspended. The section of the road is used exclusively by Elgaugol. The accident killed 4 people.
According to experts, supplies can be resumed in 10 days, which will lead to a delay in the delivery of about 0.5 million tons of coal.
Elga is one of the largest coking coal deposits in the world with total reserves of 2.2 billion tonnes of coal (according to the JORC classification). Coal from the deposit is delivered via the BAM to the ports of the Far East. The key consumers of coal mined at Elga are the Chinese company Jindong Cement and the Japanese corporation Itochu.
On July 13, 2021, A-Property offered at its own expense to build a new railway line that will connect it the Elga coking coal deposit and the Chumikan settlement located on the shores of the Sea of Okhotsk. The cost of the project may reach 2.5-3.0 billion dollars.A-Property also plans to build a coal terminal in the port of Vanino with a capacity of 30 million tons per year by 2024 and a mining and processing plant on Elga with a capacity of 32 million tons at the first stage ( end of 2021) and 45 million tons at the second stage (2023).
Railway bridge collapsed in the Trans-Baikal Territory
On July 23, 2021, heavy downpours caused the collapse of a railway bridge on the Kuenga-Ukurei section of the Trans-Siberian Railway.
Russian Railways suspended coal transportation at the site for 3 days. According to experts, the site, located in the Trans-Baikal Territory, is of key importance for the supply of coal from Kuzbass to the ports of the Russian Far East.
Exporters will have to suffer financial losses due to ship downtime and delays in coal delivery. Coal transportation can be partially resumed in 2 days. However, the situation is extremely difficult and the current work to eliminate the consequences depends on many factors, so it is possible that the timing may change.
Ogodzhinsky coal deposit reserves increased 5 times
On July 19, 2021, a revaluation of the reserves of the Ogodzhinsky coal deposit, owned by the state corporation Rostec and Albert Avdolyan's A-Property company, was carried out. As a result, Ogoji's balance reserves reached 386 million tons, which is 4.7 times more than the results of the previous assessment in 2014.
The Ogodzhinskoye coal deposit is located in the Amur Region, near the northern border of Russia with China. By 2023, A-Property plans to increase the capacity of Ogoji to 10 million tons per year. The potential design capacity of the deposit is 30 million tons of coal per year.
On May 28, 2021, Gazprombank received a pledge of 100% of the Ogodzhinsky coal deposit. The pledge of the asset is associated with a loan agreement concluded between the bank and the Ogodzhinsky energy holding, which is developing the Ogodzha coal project.
According to experts, Rostec and A-Property can increase investments in the development of the field up to 107 billion rubles. ($ 1.4 billion) over 20 years. The volume of investments in the Elga coking coal project, the key asset of A-Property, may amount to 130 billion rubles. ($ 1.7 billion).
Russian Railways restricts coal shipments to the southern ports of Russia
On July 15, 2021, the Association of Commercial Sea Ports informed Russian Railways about difficulties in shipping coal for export through the ports of the Azov and Black Seas. According to the complaint, in July, Russian Railways agreed on only half of the coal supplies. According to representatives of the Association, this may lead to a shortage of coal, the suspension of the work of certain stevedores, downtime of chartered ships and a decrease in transshipment volumes. Other types of cargo were not affected by Russian Railways policy.
Photo: JSC "Russian Railways"
According to the statement of representatives of Russian Railways, the total volume of cargo transportation to the southern ports in the first half of 2021 increased by 22% to 46.2 million tons compared to the same period last year, coal supplies increased by 180% to
14.6 million tons compared to the same period last year. In the first 15 days of July, coal shipments rose 93.4% to 1.4 million tonnes over the same period last year. Currently, the company is taking measures to increase the throughput to 125 million tons per year, developing approaches to the southern ports.
According to experts, the rise in international coal indices has led to an increase in coal supplies to the south, which has increased the pressure on the railways and transport infrastructure. Limited carrying capacity amid increasing passenger traffic to the south and a shortage of locomotives, forcing Russian Railways to give priority to more profitable types of cargo, such as grain and oil products.