Page 137 - RusRPTNov21

previously signed contracts with major Russian power plants and the public sector, according to another market source of Kommersant.
Concerning the potential of expanding output, there has been fierce rivalry for the contractors’ limited capacity.
9.1.12 Transport sector news
In October, the Russian railway market transported 110mnt of cargo, a 1mnt y/y increase (or 1%).
Oil added 2mnt (on easing OPEC+ quotas), and other cargos, such as containers and fertilizers, gained another 2mnt, while construction materials and grain subtracted 2mnt (from the high base of 2020), and coal fell 1mnt (due to logistics disruptions: Vedomosti reported that 15mnt of coal was stranded in October due to bottlenecks on the railway network). Nevertheless, demand for gondolas remained strong, and October rates were RUB1,245/day, up 7% m/m, as coal export prices were a way above breakeven. Oil tank rates were broadly flat, at RUB1,106/day. Overall, the 1% y/y total volumes growth in October came in line with RZD’s expectations. For November, the monopoly did not provide guidance.
Coal. In October, coal volumes were 32mnt, down 2% y/y. In the middle of the month, Vedomosti reported that 15mnt of coal was stranded in the Far Eastern railway network due to limited capacity (Link in Russian). Nevertheless, demand for gondolas was strong, as prices remained elevated: FOB Europe was $219/t, 33% higher m/m (vs. $45/t breakeven), and FOB Far East was $226/t, a 30% m/m increase (vs. $50/t breakeven). As a result, gondola rates were up 7% m/m to RUB1,245/day.
Oil & oil products. The segment remains constrained by OPEC+ production quotas, although they have been eased in 2021. October railway volumes were 19mnt, up 10% y/y (and down 3% to pre-COVID 2019).
Building materials. Construction materials were down 8% y/y at 11mnt, from the high base of October 2020. In addition, we see pressure from coal volumes, which compete with construction cargos for gondolas.
Metals. Metallurgical cargos were at 20mnt, flat y/y, and flat to the 2019 level. Cost of repairs. Repair expenses (the floor for gondola rates) were around
RUB465/day, up 2% m/m.
Fleet. The gondola fleet expanded 1,586 units in September to 589,518 cars, which was a 3% annualised m/m growth. Car prices stood at RUB3.5mn. The tank fleet was stable at 182,156 cars; prices were at RUB4.0-4.5mn.
Outlook. In October, the 1% y/y expansion of cargo volumes was in line with RZD’s expectations. The monopoly did not provide guidance for November. While coal prices fell from the peak due to the verbal intervention of the Chinese government, they are still 3-4x above breakeven. Coupled with strong
137 RUSSIA Country Report November 2021 www.intellinews.com