In August 2014 the coal transportation volume resulted in 26.2 million tons, which is 4.0% higher than in August 2013. Since the beginning of the year, there have been 202.3 million tons of coal shipped (0.2% more from the comparable period a year earlier).
The structure of coal transportation has significantly changed in 2014 as compared to indexes of 2013. Domestic consumption has decreased on 7.0%, while export supply has increased and redistributed. Export to such countries as the Netherlands, Korea and China fell by more than half. In contrast, there is 16-30% shipment growth to Japan, the UK, Turkey and Finland.
Decrease in Russia coal transportation to China is due to China’s domestic programme of reducing coal consumption in national economy, launched in 2012. China’s power system is gradually shifting towards alternative fuels, such as natural gas, volume of which in energy industry may double by 2020. From there, in 2014, according to Chinese government assessments, growth of coal demand may slow down to 1-2% with regard to 2013 (from + 8.6% growth of 2012 to 2011).
In midterm, China coal procurement in foreign markets may also decrease at the cost of the railway network expansion in China. This will cut down the cost of coal supply from domestic coal-mining regions to Chinese enterprises, located on the coast of the country and reduce the share of import deliveries. On the other hand, actually China is still the largest consumer of coal, inducing about one-third of world demand for this type of energy.
Japan is gradually increasing the coal consumption subsequent to changes in the structure of its energy industry after the Fukushima nuclear disaster. Many old nuclear power plants do not meet the new demanding standards of safety, and their modernization is not cost-effective. In this situation, coal delivery is a good alternative to expensive imports of natural gas or the use of solar panels.
European governments (United Kingdom, Turkey, and Finland) are increasing coal supply from Russia to diversify energy sources and to reduce their dependence on Russia gas supplies.
The growth of coal transportation volume as regard to previous year at the railroad network of Russian Federation started in June 2014. The main reason for the growth is the capacity restriction of freight delivery by inland water transport as a consequence of the fall in water level in rivers. At the end of the year, this factor will no longer play its role, and rail transportation of coal may start declining again compared with the same period of previous year. As a result, in 2014 coal transportation volume may decrease on 0.5-0.6% compared with 2013.
Leysana Korobeynikova, Senior Analyst