Page 93 - RusRPTAug19

available in Russia and localising the turbine production, according to Kommersant.
As reported by bne IntelliNews, Siemens together with GEH seem on track to maintain its leadership on Russian gas turbine market. Russia remains heavily dependent on Siemen’s which provides the lion’s share of turbines to Russian power stations. Most recently Italian Ansaldo Energy and REP Holding, a subsidiary of Russian Gazprombank, also said it will set up a joint venture that will specialise in production, repair, and maintenance of gas and steam turbines.
In the meantime Power Machines is restructuring its business to decrease the sanction risks, while reportedly aiming for gas turbine contracts together with ODK Saturn, a subsidiary of Russian state technology agency Rostec.
9.1.12 Transport sector news
Russian Railways managed to keep railway-transported volumes flat y/y
at 108mnt in July 2019, after declines in each of the last three months.
The company achieved this mainly by providing 8% discounts for coal transportation to south basin ports. Thus, coal volumes were only 3% lower y/y in July, at 29mnt, after the 6% drop a month ago, despite continued negative coal market conditions. Gondola cargos lost 1% y/y to 61mnt, with metals 3% lower y/y at 20mnt. Amid worsened gondola market conditions, daily gondola lease rates corrected 5% to RUB1,800/day after the peak of RUB1,925/day earlier this year.
However, the second largest cargo, oil, rose 1% y/y, supporting our view that May-June’s high single digit decline was a one-off caused by repairs at refineries. Overall, we expect the current trends to sustain in 2019, with sinking gondola rates and a growing oil tank market.
Coal. European CIF ARA prices are still on the edge of profitability for Russian producers, leading them to downgrade 2019 production plans. Given the usual time lag between revisions and production cuts, we expect continued declines in coal transportation in the coming months. However, 8% discounts for unprofitable directions, introduced by Russian Railways in July, might soften the sharpness of these falls.
Oil & oil products. Recovery in processing volumes after the refinery repairs in May-June resulted in 1% y/y volume growth in July to 20mnt.
Building materials. Building cargos rose 6% y/y in July, which is the first growth for the last 17 months. We believe that the reason for this was the switch of gondolas from coal to construction materials.
Metals. Metals cargos declined 3% y/y amid growth in production, which was caused by lower export volumes (June numbers showed -35% y/y).
Railcars. The gondola fleet increased 2,329 cars in June, and has gained 13,155 YTD, to 545,852 cars, up 7% y/y.
The oil tanker market saw a reduction of 244 cars: the total fleet was 175,930 cars in June.
93 RUSSIA Country Report August 2019 www.intellinews.com