The Ministry of Industry and Trade complained to the FAS about the rise in coal prices

The Ministry of Industry and Trade complained to the Federal Antimonopoly Service (FAS) about the expected increase in prices for coking coal, which will follow world quotations. Deputy Minister Viktor Evtukhov told Vedomosti about this.

According to him, the increase in the price of coal on the Russian market at the beginning of the year “was insignificant”, and now “coal miners promise a rise in price of coking coal by more than 40%.” Therefore, according to Yevtukhov, a sharp jump in the price of coking coal for metallurgists should become a zone of close attention of the Federal Antimonopoly Service, to which the Ministry of Industry and Trade has already addressed with relevant letters.

“Unlike steelmakers, coking coal producers are in no hurry to give up world price benchmarks,” said the Deputy Minister. And he added that this is “categorically unacceptable in the current conditions.”

In order to prevent a surge in prices for metal products, the Ministry of Industry and Trade, according to Yevtukhov, plans to “preventively apply” for inspections not only to the FAS, but also to other control authorities, including the Prosecutor General’s Office.

Vedomosti sent inquiries to the Federal Antimonopoly Service, the Ministry of Energy and the press services of the largest coking coal producing companies – Raspadskaya (part of Evraz), Elsie, Mechel and Kolmar.

Now the Ministry of Industry and Trade is discussing additional measures to control prices. In the coming days, the ministry, according to Yevtukhov, will hold a meeting with the participation of the Ministry of Energy, the Ministry of Construction and the Federal Antimonopoly Service. Vedomosti sent inquiries to these departments.

According to the deputy minister, the meeting will discuss the cost of metal products, coal, as well as the conclusion of long-term contracts by companies that consume metal.

According to the Metals & Mining Intelligence (MMI) industry agency, the price of medium-sized coking coal in the Russian market increased by 5% from January 1 to March 13, 2023, to RUB 9,090/t on an FCA basis (“loading on transport seller at the specified location). Over the same period, the price of export coal from Australia rose 17% to $354 FOB Australia, according to the agency.

According to a commodity market analyst, “Opening Investments” by Oksana Lukicheva, prices for coking coal in the domestic market of Russia are an order of magnitude lower than world prices. For example, domestic deliveries in February were made at about $100-110/t on the basis of EXW (“at the factory gate”), and on the world market the cost of coal in February reached $330-370/t. “Correlation between the domestic and world market, of course, exists, but now it has become much weaker than before,” she notes.

According to Lukicheva, manufacturers are trying to raise prices in the domestic market, justifying this by rising world prices. But world prices in March, she said, began to decline. Compared to last year, world prices for coking coal are now 1.6 times lower, reminds Lukicheva. “It is unlikely that prices in the domestic market will rise significantly,” the expert sums up.

Rising prices for thermal coal following export benchmarks also led to problems for consumers. In August 2022RusHydro” proposed to work out the regulation of coal prices for energy enterprises of the Far Eastern Federal District (FEFD) in Russia. The company indicated that the forecast of the Ministry of Economic Development for coal prices, on the basis of which the FAS annually indexes energy tariffs for the Far East, is +3.9% for 2022. But in fact, in the autumn-winter period of 2021–2022. coal prices for RusHydro’s largest power facilities in the Far Eastern Federal District increased by 200–400% compared to 2020.

As a result, the losses of the Far Eastern Generating Company (DGK, part of RusHydro) in 2022, according to preliminary estimates, will amount to 17.8 billion rubles, the company expected (Vedomosti wrote about this on August 29, 2022). In February of this year, Kommersant wrote that the general director of RusHydro, Viktor Khmarin, turned to Russian President Vladimir Putin with a request to allocate 93 billion rubles from the budget. to “restore financial stability” of the DGK.

Alexander Volobuev contributed to the preparation of the article