Page 105 - RusRPTApr20

Not all Russian tourist firms will withstand the coronavirus outbreak that almost destroyed tourism, Irina Tyurina, press secretary of the Russian Union of Travel Industry, said in an interview to Ekho Moskvy radio station broadcast on Monday. “The process has already started, it is just going on silently without loud scandals. Companies are leaving the market. One responsible company has closed the business and said that it is unable to return all the money to tourists, but it has financial guarantees and a sum in the personal responsibility fund in the Turpomoshch association. To use the money, a tour operator has to leave the market,” she said.
9.1.10 Utilities sector news
Electricity is the new oil. The world is slowly but persistently moving toward electricity as the main source of final energy. We estimate that the share of electricity has more than doubled over the last 30 years to 19%. Russia has not ignored this process. The country’s catch-up process on white goods ownership, the electrification of its railways, and the growing share of service industries (which are more dependent on electricity supply than other energy sources) in GDP have all led to an increase in electricity’s share of the fuel mix in Russia. In future, wider adoption of EVs, and a continuation of the aforementioned trends, are likely to further electricity’s rise.
9.1.12 Transport sector news
In March, Russian railway transported cargos fell 6mnt (6% y/y) to 107mnt. The rate of decline was the fastest since 2013. Coal volumes were 5mnt (14% y/y) lower at 29mnt, metallurgical and oil volumes each lost 1mnt, both to 20mnt (down 6% and 5%, respectively). We believe that the rapid volume decrease was caused by lower exports, as consumption dropped due to the spread of COVID-19. Given weak fundamentals, gondola lease rates subsided 8% m/m to RUB1,100/day. Oil tank rates were stable at RUB1,125/day. For April, RZD envisages a 5% y/y decline in total volumes. We note the downside risks of lower demand for cargos caused by the virus outbreak in Europe and Russia.
Coal. In March, coal volumes fell 14% y/y to 29mnt. We believe that already weak demand in Europe was further hurt by coronavirus, resulting in even lower export volumes. Coal prices were broadly unchanged YTD, with European CIF ARA trading at near $47/t (vs. the breakeven of $50/t) and Eastern FOB Newcastle at $66/t (vs. breakeven of $60/t).
Oil & oil products. Oil volumes lost 5% y/y to 20mnt. We also note how the virus caused lower export volumes and demand for products, e.g. jet fuel.
Metals. In March, metallurgical cargo volumes decreased 6% y/y as ferrous metals were 11% lower against a backdrop of falling Chinese prices and stalled European and Turkish markets.
Discounts. In March, RZD offered 13% discounts for coal exports through Baltic and South ports, and transit through Kazakhstan. To support volumes, the FAS might increase the maximum possible discounts amount from 13% to 99%.
105 RUSSIA Country Report April 2020 www.intellinews.com