Page 108 - RUSRptApr17

terms attached to the funding .
9.1.10 Transport sector news
The first freight train to run from Britain to China set off on its 12,000-kilometre route on April 10 . The bright red train will pass through countries including Poland, Belarus, Russia and Kazakhstan before arriving on China’s eastern coast of China. Goods including baby products, whiskey and pharmaceuticals are aboard. UK trade officials, preparing to exit the European Union, are reportedly hoping the train will be the first of many export trains that make their way to the Far East.
Railway Cargo Turnover kept growing growing nicely in March. Rail transportation volumes and cargo turnover continued to grow well in March, increasing 3.8% YoY and 8.4% YoY, respectively, and loading remains at a strong pace compared with the previous month (average daily volumes in February grew 4.5% YoY and daily cargo turnover gained 5.9% YoY).
Among cargos there are continuing strong trends in coal (volumes up 10% YoY), while oil and oil products remained flat YoY and construction materials were down 5% YoY. The gondola market keeps improving, with a 4.5% YoY increase in volumes, which might support tariffs. However, we remain cautious over the tank car business, which we see as the chief containing factor for Globaltrans’ financials (Hold, 12-month Target Price USD 6.5, ETR 0%).
Coal. Coal volumes kept rising fast, at 10% YoY in March, and accounting for nearly 30% of all volumes transported by rail they provided major support for the rail industry. High global coal prices (USD 80/t for FOB, Australia thermal coal) support export supplies from Russian coal producers; they grew at high double digit rates YoY as coal producers might have had time to load production facilities from when prices started to rise, while the bottlenecks with rail fleet availabilities has vanished.
Oil and oil products . The segment is stuck in an oversupplied market, with volumes yet again flat YoY in March, after insignificant growth in daily volumes in January-February (1.5-1.9%). Even with the slight recovery in oil products output volumes (3-4% YoY in ADV in 2mo17) there are still several factors preventing further volumes growth for the rail market. The pipeline projects (such as South and North projects for light oil products) are going to continue grabbing volumes from the rail market, while competition with river transport usually increases in the spring-summer.
Building materials . Building materials were weak again in March, falling 5% YoY after a similar decline in daily volumes in February (-5.9% YoY) and a one-off 9% YoY surge in January.
Metals and others . Metallurgical cargo’s aggregated volumes were flattish YoY in March, as the 4.3% rise in ore volumes was fully offset by the 4.5% drop in ferrous metals. Other less important metals, such as scrap and base metals ore, were also in line with last year’s volumes. Among other cargos, grain was 5% weaker YoY, again on the high base, while vs. March 2015 grain volumes were 20% higher. Fertilisers remain buoyant (+ 2.1% YoY).
108 RUSSIA Country Report April 2017 www.intellinews.com