Page 115 - RusRPTDec20

9.1.12​ Transport sector news
In October, railway volumes stood at 110mnt, up 0.3% y/y. While oil volumes were down 12% y/y (-2mnt), they were compensated for by the 10% y/y growth in construction cargos (+1mnt) and 37% y/y increase in grain (+1mnt). Gondola volumes were up 2% y/y due to the aforementioned building cargos, while coal and metals were flat. Gondola lease rates were unchanged from September, at RUB750/day (-53% y/y), as growing volumes were mitigated by the increasing fleet. Oil tank rates were at RUB900/day (-12% y/y, flat m/m). Total volumes came better than the -1% y/y expected by RZD. For November, the monopoly envisages flat y/y dynamics. We think that the second wave of coronavirus poses a moderate risk in November-December, mainly to the oil segment: lower jet fuel and gasoline volumes.
Coal​. In October, coal volumes stood at 33mnt, flat y/y. Coal prices were $57/t for Europe (vs. $40/t breakeven) and $54/t for Russian Far East export (vs. $45/t), which made sales profitable.
Oil & oil products​. The tank car segment lost 12% y/y to 17mnt, as the output from refineries remains depressed. Tank lease rates stood at RUB900/day, flat MoM.
Building materials​. Construction materials increased 10% y/y to 12mnt in October, due to the implementation of National Projects, we think.
Metals​. Metallurgical cargos were flat y/y at 20mnt. The y/y declines of 3% in ferrous metals and 2% in iron ore volumes were offset by the 24% y/y growth in scrap and 14% y/y growth in coke coal.
Grain​. Grain volumes increased 37% y/y to 3mnt against the backdrop of the strong harvest. In 2020/2021, Russia plans to export 50mnt (the record was 52mnt in 2017/2018).
Cost of repairs​. Expenses for spare parts and repairs plunged to RUB448/day in October, down 26% YTD. This rate is the minimum level to, which gondola rates can fall.
Fleet​. The gondola fleet increased 1,439 units in September to 573,386 cars, and is up 2% YTD. The oil tank fleet was at 178,290 cars, seeing a m/m growth of 442 cars.
Outlook​. In October, for the first time in the last 12 months, railway volumes were up y/y. In November, RZD expects volumes to be flat. We note that growing gondola volumes kept lease rates unchanged MoM. However, we expect the fleet surplus to add up, worsening the current situation. The second wave of coronavirus brings moderate risks, as manufacturing industries are not
115 ​RUSSIA Country Report​ December 2020 www.intellinews.com