Russian exporters pay less for coal transportation

The cost of rail delivery export costs for decreased at the beginning of this year in Russia due to lower railcar lease rates and the depreciation of the rouble. This, combined with higher export prices in Asia and Europe due to strong demand, has improved the position of Russian exporters and allows them to increase their margins.

Rail delivery costs for thermal coal transportation from Kuzbass towards the northwestern port of Ust-Luga fell by around 24pc on the year to $23.15/t in January. The burden of transport costs on Russian coal suppliers eased significantly by the start of this year. In January 2020, the cost of coal delivery by rail from Kuzbass to Ust-Luga accounted for more than 65pc of the Russian coal price on a fob Baltic ports basis compared with 35pc in January 2021, when export prices increased. And rail delivery for thermal coal transportation towards the far eastern port of Vostochny fell by 25pc to $27.89/t in January.

A steep fall in coal handling rates in Russian ports since the beginning of last year also supported coal exporters. The cost of coal handling in Rosterminalugol in Ust-Luga now is 27pc lower than a year ago, although rates in far eastern terminals decreased only moderately, giving less discount to suppliers than in the northwestern direction. The cost of coal transshipment in Vostochny decreased only by 3.6pc on the year at the start of 2021.

Despite lower delivery cost and higher margins, some Russian coal exporters still face problems with delivery towards far eastern ports due to limited railway capacity and high traffic. And many of Kuzbass' coal exporters are entering the Black Sea port of Taman to send Panamax and Capesize vessels to Asia.

Find more news, price information and market analysis on Russian coal exports in the [Argus Russian Coal](https://www.argusmedia.com/ru/coal/argus-russian-coal) report.