Page 91 - RusRPTMar20

tourists, an increase of 15.7% from 2018. South Korea contributed the third-most visitors at more than 413,000 tourists, an increase of 20.8% from 2018. The United States came in fourth with 241,000 American tourists last year, up by 6% from 2018. Israel rounded out the top five with 199,000 inbound tourists, an increase of 21.7% in a year. Almost 33mn foreigners visited Russia overall, not only for tourism.
9.1.11 ​Metallurgy & mining sector news
As the rebound in global steel prices continued in January, the seaborne steelmaking margin continued to rise​. However, the acceleration in China’s output and potential reduction in demand suggest elevated correction risks in the short term. Against this, fundamentals continue to favour domestic-oriented MMK and Severstal in Russia, and Erdemir in Turkey, as the price performance was stronger in January (in Russia) and is set to continue outperforming in February, while local demand momentum remains solid (in both Russia and Turkey).
Raw materials costs correct down on iron ore. BOF raw materials costs slid 5% during January.​ Coking coal prices were up 10% to $148/t by the end of the month, driven by potential supply disruptions in Australia due to fires, but iron ore prices were down as much as 7% to $85/t. Platts reports that some Chinese steelmakers are reducing output by up to 20% in February, reacting to reduced transportation and construction activity amid the coronavirus outbreak.
Russia’s Ministry of Finance proposes to adjust the Mineral Extraction Tax (MET) formula for coal and diamond miners, ​to increase budget revenues on higher prices for the commodities, ​Kommersant ​daily reported citing unnamed officials. As reported by ​bne IntelliNews,​ the ​extraction sector could be squeezed by the new government​ to finance its pro-growth mandate and social improvement push. Reportedly, for diamond miners, the ministry proposed keeping the MET rate unchanged at 8% but using actual realised prices to calculate taxes rather than the current quotes, which are updated a few times a year and lag market prices by several months. The MET would still be calculated based on the volume of diamonds produced and not the volume sold. According to Kommersant, the ministry estimates that this change could result in an additional RUB3.3bn ($50mn) per year in MET payments.
Rough diamond supply fell in 4Q19. ​4Q19 global diamond production was down 8% y/y to 35.0mnct, the largest y/y drop since 2014. This was primarily driven by the 15% y/y drop in output at both Alrosa and De Beers. The fall in sales was even more pronounced, at 9% y/y, driven by a 29% y/y decrease in De Beers sales. As such, 2019 was the second year of falling global rough diamond output: it was down 3% y/y to 143mncts. However, only 136mnct was sold, suggesting a 7mnct build-up in miners’ inventory. We expect global rough diamond output to fall a further 4% y/y in 2020F to 137mncts.
Rough diamond sales rose in January. ​In line with the normalisation on the rough diamond market, the De Beers Cycle 1 print of $545mn in January was the first positive y/y rate since April 2019.
9.1.12​ Transport sector news
91​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com
Transport turnover contracted -4.4% y/y in January, driven by most