Page 86 - RusRPTFeb20

1,278mnt. Altogether, the Russian railway industry lost 12mnt of cargos: 3mnt of coal, 5mnt of oil and oil products, and the rest made up of metallurgical cargos. Gondola lease rates stood at RUB1,450/day in December, -3% m/m and -25% YTD against the backdrop of weakening demand. Oil tank lease rates stabilised at RUB1,025/day. As Russian Railways’ target for 2019 of a 0.5% y/y drop in volumes was not achieved, the statistics bring negatives for the industry. For January, RZD expects a 3% y/y decline in volumes, which increases pressure on rates and supports our view of a further 18% y/y decline in gondola lease rates in 2020.
Coal​. In December, there was another rapid decline in coal volumes of 5% y/y (the second largest after the 6% y/y drop in June). Coal prices, which did not rebound and fluctuated below the breakeven prices for Russian exporters, might cause a further decline in this type of freight in 2020, we believe.
Oil & oil products​. Oil volumes were flattish in December. For 2019, they stood at 232mnt (-2% y/y), because of losing market share to pipes.
Building materials​. Construction materials volumes rose 4% y/y during the month, as it took surplus gondolas from falling coal. During 2019, volumes were flat, rebounding after the 7% y/y drop in 2018 when there was a boost in coal transportation.
Metals​. In December, metallurgical cargos lost 3% y/y, to 20mnt. For 2019, the numbers stood at 239mnt, a 1% y/y decline, on the backdrop of the weaker market environment.
Railcars​. The gondola fleet increased 2,174 cars in November, implying a 6% (30,535-car) YTD expansion of to 558,224 cars. The oil tanks fleet grew at a normal rate, adding 220 cars to 178,696 in November. The prices for cars on the gondola and oil tank markets were flat m/m in December, remaining high at RUB3.1-3.6mn.
Outlook​. With 2019 having ended on a minor note, falling trends might continue in 2020 (that idea is supported by RZD’s negative view on January volumes). As a result of a surplus gondola fleet, we expect lease rates to continue sliding to c.RUB1,350/day. In the oil segment, falling volumes would be balanced by fleet scrappage, we believe, allowing lease rates to grow along with inflation.
86​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com