January 23, 2025
The coal industry in Russia and around the world will come out of the crisis no earlier than 2027, and only if production is reduced and, as a result, the supply of energy (cheap) coal is reduced. Kommersant writes about this with reference to the NEFT Research review.
An additional challenge for Russian companies remains the need to provide discounts to customers due to Western sanctions and logistical difficulties, which reduces the profitability of the industry and makes it generally unprofitable.
According to experts, prices in the first quarter of 2025 will continue to decline compared to the levels of the end of 2024, and for Russian coal of medium quality, demand will be determined by Chinese utilities. The latter circumstance is a problem, as China is gradually replacing supplies from Russia, including at the expense of Mongolia.
Alexander Kotov, consulting partner at NEFT Research, noted that by now about 60 coal companies in Russia are unprofitable, accounting for 40 percent of all production in the country. However, he points out, truly massive closures of enterprises will begin only when export prices for coal drop by another 25-30 percent.
Maria Kolomiets, Director of Corporate Ratings at Expert RA, added that the situation with consumption in the domestic market could add to the industry's problems. If the steel industry continues to reduce output, the demand for coal will decrease.
Analysts believe that coal from Russia will have to shift to the Philippines, Malaysia, Brazil, Chile, and Argentina, and the window of opportunity will be to reduce production in Australia and Indonesia.
Earlier it was reported that the government is preparing proposals for a special procedure for the bankruptcy of coal companies, which will allow not to stop production. The authorities are also considering options for direct budget assistance to boost exports through western ports.