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Pulse of Charcoal - July 31
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 quotations in Europe exceeded $ 140 / t. A gas shortage in the EU due to unplanned maintenance at a Norwegian gas field has supported coal indices. Gas quotes on the European TTF trading floor rose to a record 40.6 EUR / MWh (+ 4.5 EUR / MWh by 21.07.2021). Coal reserves at ARA terminals are at the level of 4.6 million tons (-0.3 million tons by 21.07.2021). An additional factor behind the rise in coal prices was the high demand for electricity in a number of European countries due to hot weather.
Coal quotes for the South African material dropped below $ 130 / t. as a result of a drop in demand from Indian enterprises for South African material and the completion of scheduled maintenance of the railway (20-26.07.2021) connecting the coal-mining provinces of South Africa and the port of Richards Bay. However, experts predict that South African coal indices will continue to rise in the short term due to additional supply constraints caused by Transnet's plans to resume repairs in August 2021.
Coal prices of 5500 kcal / kg NAR of domestic production in the port of Qinhuangdao exceeded $ 160 / t. as a result of the suspension of the operation of ports in Shanghai, Zhoushan and Ningbo (PRC) due to the typhoon. Heavy rains in eastern China caused average daily temperatures to fall, resulting in reduced demand for electricity for air conditioning. Experts predict that high average daily temperatures will return to the PRC by mid-August.
Despite the high trading activity of Asian buyers, the prices of Australian coal, which are at the level of historical highs in 2008, fell below 160 USD / t. as a result of the adjustment.
The closure of a number of mines due to the worsening epidemiological situation in Indonesia and, as a result, the reduction in supplies, support coal quotations above $ 120 / t.
A shortage of Australian coking coal, driven by strong demand and scheduled maintenance at a number of Australian mines, supported Australian coking coal quotes above $ 215 / t.
According to experts, this year, global steel production could reach a new record thanks to the increase in production volumes after the COVID-19 pandemic. In the first half of 2021, Chinese metallurgical plants produced 563 million tons (+ 12% compared to the first half of 2020). According to the forecasts of the International Association of Steel Enterprises, in 2021 the total volume of world production may reach over 2 billion tons.
Russian Railways will lose more than 6 million tons of cargo after the collapse of the bridge
On July 26, 2021, representatives of the Russian Railways company announced that traffic on the Kuenga-Ukurei section of the Trans-Siberian Railway (Transsib) was partially resumed. The full recovery of supplies to the east may take more than 5 days, given the extremely difficult conditions for the repair work.
On July 23, 2021, due to heavy rainfall, a railway bridge collapsed on the Kuenga-Ukurei section of the Transsib. Russian Railways notified exporters and freight operators about the restrictions imposed on the transportation of all types of goods, with the exception of food supplies.
According to experts, even a short delay in the transportation of goods will lead to a number of negative consequences for market participants. Russian Railways is expected to lose 3.3 million tonnes of total cargo turnover in July. Moreover, ongoing repairs, a large number of abandoned trains and railway congestion may lead to additional losses of 3.2 million tonnes of cargo in the first half of August. According to conservative estimates of experts, underdelivery of export volumes of coal in July-August may amount to about 2 million tons.
In July 2020, the volume of cargo transportation in this direction reached 103.8 million tons. Despite the fact that Russian Railways is trying to unload the Trans-Siberian Railway, redirecting supplies to the Baikal-Amur Mainline (BAM), the weak carrying capacity of the single-track BAM will not be able to cope with such a volume of cargo. The already limited train traffic at border crossings near the Chinese border exacerbates the situation.
Exporters of coal, metals and iron ore will be the hardest hit, according to the Russian Association of Railway Operators, including financial losses due to ship delays and delays in shipments. The Kuenga-Ukurei Transsib section, located in the Trans-Baikal Territory, is of key importance for the supply of coal from Kuzbass to the ports of the Far East.
In addition, since a large number of empty wagons in the Far East cannot be redirected after unloading to Kuzbass, their potential shortage in the short term will also increase the load on the Russian Railways network.
At present, Russian Railways is implementing a large-scale program to increase the capacity of BAM and Transsib to 180 million tons for all types of cargo by 2024. However, the expansion of the capacity of railways is unlikely to reduce the risk of new accidents in the future, given the obsolete railway infrastructure in the Far East in need of modernization.
Lavna port capacities are loaded until 2043.
On July 26, 2021, the Port Technology Development Center (PTC), owned by Boris Guttsov, signed a take-or-pay contract for the transshipment of 18 million tons of coal, mainly premium coking grades, in the port of Lavna until 2043. Lavna Project plan to launch in 2023
According to Mikhail Kadochnikov, deputy general director of GTLK (Russian State Transport Leasing Company), which owns 5% in the Lavna port project, CRPT has consolidated the export volumes of 4 independent coal companies in Kuzbass. Although the names of coal companies planning to supply coal to Lavna remain undisclosed, a representative of the CRPT indicated that the key shareholders of the port of Lavna: BusinessGlobus (30%) and SDS-Ugol (25%) have nothing to do with this. CRPT also owns 30% in the project.
The construction of the port of Lavna on the western coast of the Kola Bay was planned to be completed in 2012. However, the project was postponed several times. In 2020, due to the fall in coal prices, key exporters did not sign binding agreements on the capacity utilization of the Lavna coal terminal.
CRPT is a Russian transport company. In 2020, the volume of supplies of CRPT amounted to
15 million tons of coal. On July 01, 2021, Power of Siberia, owned by CRPT, won the auction for the purchase of the Zarechnaya mine in Kuzbass, providing CRPT with its own cargo base in the amount of 5-6 million tons of coal. The transaction price was RUB 1.8 billion. ($ 24.4 million). CRPT also owns 24.79% in the port of Sukhodol in the Primorsky Territory.
Solntsevsky coal mine resumes work
On July 28, 2021, by decision of the Federal Service for Environmental, Technological and Nuclear Supervision of Russia (Rostekhnadzor), the Solntsevsky coal mine, owned by the Eastern Mining Company (VKG), resumed work. On July 10, 2021, after the rock collapsed at the open pit, Rostekhnadzor discovered industrial safety violations and suspended production at the enterprise for 30 days. The management of the Solntsevsky open-pit mine eliminated the violations and submitted the necessary documents to Rostekhnadzor.
Photo Shoot: LLC "VGK"
In January-July 2021, the volume of production at the Solntsevsky coal mine amounted to 4.8 million tons (-0.3 million tons compared to January-July 2020).
WMC is the main coal mining company on Sakhalin Island, accounting for about 80% of all production in the region. The company is owned by the Cypriot holding Altraso Ventures Ltd., the former CEO of SUEK Oleg Misevre and the head of the ICT group Alexander Nesis. EVGK is the largest Russian exporter of brown coal. The company manages the Solntsevsky coal mine and the Shakhtersk coal seaport. The coal reserves of the VGK are more than 300 million tons, the volume of coal production by the company in 2020 amounted to 11 million tons (+1.8 million tons or + 20,3% by 2019).