Page 124 - RusRPTJul21

comes up with a solution or Rosseti moves on with granting the
100% payment.
● MinEnergo’s view on the WTE plans matches that of most
players, especially in light of the multiple comments from industrial consumers about the need to reassess the add-ons. The view on the current surcharges remaining intact is supportive for the incentives for future investments.
● Potentially moving CCGT projects with localised turbines to the core auction is supportive, as the government has been trying to encourage localised production. Auctions could thus subsequently imply a deeper modernisation at the core auctions, with a greater reliability of equipment for the long term, thus supporting profitability with a proper rate of return.
9.1.11 Metallurgy & mining sector news
Russian Ministry estimates state projects needs 2-3mt of steel. Interfax reported that the Russian Ministry of Industry and Trade currently estimates the preliminary needs of state construction projects and regional state projects at 2-3mt of steel. However, the ministry is continuing to collect applications and process them. Deputy Minister Yevtukhov mentioned the volumes should be small, while a wide range of steel products may be needed. Note that at end-May, Yevtukhov said that contracts for the state projects should imply up to 30-40% discounts, maybe more.
9.1.12 Transport sector news
In June, the Russian railway market remained strong, slightly subsiding from May, when it set a new 10y high.
Volumes of 107mnt were up 10% y/y and 5% to 2019, and were flat to 2018. The main contributors have been the same since the beginning of the year: coal (which increased 4% relative to June 2018 and set a new historical high), and construction materials (11%).
Meantime, oil and metals were down 13% and 5%, respectively, from 2018. As gondola volumes were on an upward trend, rates climbed 8% m/m to RUB829/day. Oil tank rates were up 3% m/m to RUB1,045/day.
Overall, 10% y/y growth in June volumes came a bit above the 9% RZD had expected. For July 2021, the monopoly expects at least 5% y/y growth, or 1% higher than July 2019. We see this target as conservative and therefore believe it might be exceeded.
Coal. In June, coal volumes were 31mnt, 4% above June 2018, as
124 RUSSIA Country Report July 2021 www.intellinews.com