Without noise and without coal dust – Newspaper Kommersant No. 54 (7499) dated 03/30/2023

Russian coal of all grades and in all directions of deliveries fell in price. Since the beginning of the year, thermal coal has fallen in price by 18–20%, and the prices of pulverized coal fuel, which is used by metallurgists, have fallen especially noticeably — by almost 30%. Prices are still high, but this does not save the industry from cutting production. According to experts, the price of coal is being pressured not only by the onset of spring, but also by the global banking crisis, because of which investors are afraid to invest in raw materials.

Russian thermal coal is getting cheaper in all directions, follows from the report of the Center for Price Indices of Gazprombank (TsCI GPB). Since the beginning of the year, 6000 kcal FOB Far East coal has fallen in price by 18% to $133 per ton, 5500 kcal coal by 15% to $122, and 5000 kcal coal by 17% to $104. Prices are falling in both the western and southern directions. Coal on the basis of FOB Taman fell by 20%, and FOB Baltic — by 21.1%. A Kommersant source in the market says that exports through Taman in the first quarter are approximately at the same level as a year ago. The volume of exports in the south depends primarily on the capacity of the railways: everything that reaches it is handled. If Russian Railways agrees on a larger volume, exports will grow.

At the same time, according to the interlocutor of Kommersant, the profitability of exports remains: exporters choose a route, focusing on a set of factors, including both current and expected CIF / CFR prices, and freight rates due to the geographical location of the port and the ability to load large ship lots. Prices for thermal coal in the markets can change quite often during the year, quarter and even one month, says a Kommersant source.

Decreases in price and coal for metallurgy. According to the report, PCI (pulverized coal fuel) is becoming cheaper: since the beginning of the year, the price has fallen by 29%, to $160, on a FOB Far East basis. GZh grade coals have been at $216 for several weeks, but market participants, according to the report, expect their price to drop by $25-30 per ton upon contracting in early April. The increase in supplies from Australia to China has a limited effect on prices. Russia and Mongolia covered 83% of coking coal supplies to China (4.4 million tons and 6.5 million tons, respectively), while Australia supplied 73 thousand tons in January-February. The reasons for such low volumes are the high cost of production, the long delivery time and the lack of free volumes of coal after the rainy season.

Despite fluctuations, coal prices are still high. So, in April 2021, thermal coal reached $100 only on the basis of FOB Vostochny, in other export directions, prices were below this bar. Nevertheless, at the beginning of the year there is a decrease in coal production. According to Rosstat, in January 2023, coal production decreased by 1.8% compared to January 2022, to 34.9 million tons. Compared to December 2022, the decrease was 19.3%.

“At the beginning of the year, there is a decrease, but we hope that we will even out the situation,” Energy Minister Nikolai Shulginov confirmed on March 28. Kuzbass, according to the Ministry of Coal Industry of the region, in January-February reduced coal production in annual terms by 7.3%, to 35.2 million tons of coal, production of coal of energy grades decreased by 12.4%, to 24 million tons.

With the end of the risk of a cold winter in Europe, fears of a shortage of energy resources in the world are reduced, which leads to a fall in prices for all energy carriers, including gas, oil and coal, says Sergey Grishunin from the NRA. At the same time, there are investors’ fears of investing in commodities amid the unfolding banking crisis in the world, the analyst adds.

According to Mr. Grishunin, lower prices may lead to the fact that part of Russian exports, especially low-grade and unwashed coals, will not be able to be sold on world markets, taking into account the cost of freight and discounts for Russian products. Price corrections are also taking place under domestic market contracts, he notes, but “it is rather a reason to partially reduce excess coal production in Russia, especially in terms of low-grade products.”

Evgeny Zainullin