Russian coal producers and exporters continue to suffer hard times in Jan-Jun 2020. In 6 months of 2020 Russian coal production fell to 194.2 mio t (-20.7 mio t or -9.6% year-on-year), whilst preliminary data show a decline in seaborne coal exports to 80.3 mio t (-5.9 mio t or -6.8% year-on-year).
The drastic fall in coal prices, amid record low gas prices, slower industrial activity and lower power demand resulting from Covid-19 pandemic led to production and exports cuts among Russian suppliers.
Coal-to-gas switching across Europe and competition with renewables continue to put pressure on Russian coal suppliers, while cheap natural gas and oversupplied stocks limit the prospects for coal prices recovery in the short- and medium term.
According to the Russian coal industry development program, recently approved by Russian Prime minister Mikhail Mishustin, steam and coking coal extraction in 2020 is targeted to reach 435 mio t under the conservative scenario and up to 466 mio t under the optimistic scenario. However, at the current production level, Russian overall coal production in 2020 will hardly reach forecast figures of the conservative scenario. Most likely, coal mining volumes will be slightly above 400 mio t in comparison with 441 mio t in 2019, with coal exports at around 200 mio t on the background of 220 mio t last year.
Source: CAA Contemporary Analytical Agency