They began not to pass – Newspaper Kommersant No. 25 (7470) dated 02/10/2023

Large metallurgical companies are asking the government for guarantees for the export of steel through the Eastern range. According to metallurgists, since the beginning of the year, the loading of metal in the eastern direction has fallen by 60%, including for export – by 80%, since other cargoes have received priority. According to Russian Railways, the rate of decline in metal loading is about half that. Analysts believe that it will be difficult for metallurgists to obtain export guarantees against the backdrop of competition with other cargoes, and containerization of metal exports can partly solve the problem.

Russian metallurgists, through their association Russian Steel, are preparing an appeal to the government with a request to ensure guaranteed export of steel through the Eastern landfill in the amount of 8-9 million tons, which is in line with the plan of Russian Railways for this year, sources told Kommersant familiar with the preparation of the appeal. It was caused by problems in the delivery of railcars loaded with steel to Russian Railways.

According to Kommersant’s interlocutors, over the past two years, the volume of transportation of metal products through the Eastern landfill has gradually decreased, although ferrous metals are highly profitable cargoes. In January of this year, loading decreased by 60% year-on-year, including for export — by almost 80%. All this leads to the failure of contracts with consumers in Russia and foreign clients. The association and large metallurgical companies declined to comment.

Evraz made a similar request to First Deputy Prime Minister Andrey Belousov in January. The letter said that in 2020 there was a peak in the loading of ferrous metals to the east, of which 66% was provided by Evraz. But after the suspension of non-discriminatory access rules and the introduction of temporary rules for scheduling cargo, priority was given to export oil cargo and container trains. In addition, due to guarantees for export from Kuzbass, coal is actively moving through the Eastern landfill, which is in the order below metals.

As a result, the clearance of loaded wagons from two Evraz plants — NTMK and ZSMK — decreased by four times compared to January 2022. The company was forced to partially reorient 34% of its products to other areas, but the rest cannot be redirected. Restrictions on transportation to the east, according to Evraz, will lead to a reduction in the company’s production by 2 million tons per year, which will cause a decrease in mining and ore enrichment to 7 million tons. Lose money and Russian Railways. As a result, Evraz would like to guarantee the export of 2 million tons for NTMK and 3 million tons for ZSMK. The office of Andrei Belousov told Kommersant that the issue is currently being considered at Russian Railways.

JSC Russian Railways clarified that in January 2023, the loading of ferrous metals in the direction of the railways of the Eastern polygon decreased by 30%. At the same time, if exports decreased by 40%, then in domestic traffic, traffic volumes remained at the level of January 2022. “According to the temporary rules for determining the priority of receiving goods for transportation, metallurgical products in domestic Russian traffic still enjoy an advantage,” says the Russian Railways OJSC. transportation and raw material exports in specialized rolling stock.

As a priority (immediately after military cargo and cargo for emergency response), export coal from several regions is now transported at the Eastern landfill, the volume of shipments of which is specified in separate instructions of the president (see Kommersant of March 2, 2020) and fixed in the agreements of the region and Russian Railways. We are talking about rather large volumes: for example, an agreement was signed with Kuzbass for guaranteed export in 2023 of at least 53.1 million tons for export. The same contracts, but for smaller volumes, were concluded with Buryatia, Khakassia, Tyva and Yakutia.

Metallurgists have repeatedly asked for discounts on the transportation of metallurgical products. However, Russian Railways noted that it was not advisable to provide them in the eastern direction, given that the transportation of metals over long distances and to the Far East already has a total discount of 66% (see Kommersant dated October 31, 2022). As for other possible discounts for metallurgists, Alexei Shilo, deputy general director of the monopoly, said at the end of January, negotiations are ongoing, while for Russian Railways, when they are provided, a guarantee of export volumes is a matter of principle.

Sergei Grishunin from the NRA says that the metallurgists have little chance of getting guarantees for export to the east. In his opinion, companies currently have the option of containerizing exports, since containerized cargo goes faster and has priority when loading. “Of course, this reduces the already low marginality of exports to the east, but now it is more important not to allow a decline in production in order to maintain low costs and jobs,” the expert notes. In his opinion, taking into account the weakening of the ruble, such measures will help maintain a positive profitability of rolled products exports.

Evgeny Zainullin, Natalya Skorlygina