The energy Ministry expects by the end of year fall in the production and export of Russian coal on the background of reduced economic activity due to the coronavirus. While coal prices in Europe and in Asia are declining due to high stockpiles and competition from natural gas. According to experts, the most crisis-hit producers of low quality.By the end of 2020 the volume of production and export of Russian coal will decline, wrote in a column for the magazine “Energy policy”, energy Minister Alexander Novak. In his opinion, the demand is affected by the slowdown in economic activity and reducing energy consumption enterprises. “An additional obstacle was the fact that a coal marine terminal in the Russian far East has faced difficulties in providing export deliveries of Russian coal to the countries of the Asia-Pacific region. In particular, the ships that came for coal, it is necessary to load it in the next two weeks to be in the quarantine area that affects the rate of turnover of coal products”,— says Alexander Novak. The last two years, coal production is stable at 441 million tonnes per year.Speaking at a meeting with leaders of fractions of the state Duma on April 22, Alexander Novak have said that the pandemic coronavirus resulted in a decrease in the production and export of steam coal by about 10%. Increased exports of coking coal. Irina Elizarovskaya of Raiffeisenbank emphasizes that even during the outbreak of coronavirus and steel production in China would not stop showing on the first quarter growth in steel production by 1.2% year-on-year. The fact that stopping the blast-furnace production — a costly and technically complex process. As a consequence, the consumption of coking coal and iron ore in China fell.Parallel to the decrease of coal prices in both the European and Asian markets. Coal 6 thousand kcal/kg fell from $68 to $59.94 Hz (FOB Russian Far East ports) per ton. However, some suppliers give big discounts to sell the stocks of marine terminals in the far East. In addition, in China in April with a surplus coal supply, and the authorities began to suspend the import of fuel via some ports, particularly Guangzhou. In Europe Russian steam coal fell by 17.7%. In addition to reducing coal generation at its cost influenced by the record low gas prices.Affected by the crisis in the coal industry will be producers of low-grade marks D, G and GZH, according to Maxim Hudalov of an ACRE. The market is likely to temporarily leave raw coal. “Part of the companies that approached the crisis with excessive debt, likely to go for restructuring. Banks are unlikely to want to bankrupt the company, realizing that the industry is cyclical, and in the next three to four years prices in��rotsa level, providing companies the opportunity to at least pay the interest on loans”,— believes the expert. However, companies with large production volume and high quality branded lineup, the analyst believes, will be able to continue supply due to premiums for their products to the underlying price and weak ruble.Eugene Zainullin
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