Page 125 - RusRPTJul21

prices continued breaking highs: in June 2021, FOB Europe was $98/t (vs. $42/t breakeven) and FOB Russian Far East export was $123/t (vs. $47/t).
Oil & oil products. Oil cargos remain constrained by OPEC+ production quotas. Volumes of 17mnt were still 13% lower than in June 2018.
Building materials. Construction materials, remaining strong on the restart of the economy, were 11% higher than in June 2018, at 12mnt.
Metals. Metallurgical cargos were 5% below June 2018 on the high base, but still 2% above June 2019. While ferrous metals declined 8% (to 2019) – because European demand has still not fully recovered – they were compensated by 3% and 30% growth in iron ore and scrap, respectively. The latter surged ahead of the planned increase of export duties in July.
Cost of repairs. Repair expenses (the floor for gondola rates) were around RUB430/day, down 15% y/y and flat YTD.
Fleet. The gondola fleet expanded by 1,375 units in May to 584,735 cars, which was 3% annualised m/m growth. In April, we saw only 1% growth, which seems to be a one-off due to the large write-offs. The tank fleet was stable at 180,763 cars.
Outlook. In June 2021, strong volume growth was broadly in line with RZD’s expectations. For July, it sees at least a 5% y/y increase (1% above the July 2019 and July 2018 levels). We also highlight that the 18% YTD growth in gondola rates was not caused solely by the improvement in volumes: supply was also reduced. In 1Q21, the largest railway company, FGK, set aside 25k gondolas (20% of its fleet, 4% of the industry), supporting rates. As it steadily returns these gondolas back to service, rate recovery is likely to cool. We expect them at RUB900-950/day by YE21, from the current RUB829/day.
125 RUSSIA Country Report July 2021 www.intellinews.com