Kazakh coal production fell last month, continuing its downward trend on expectations of lower domestic demand this heating season, while restricted Russian rail capacity for Kazakh exports offered little incentive for miners to raise output.
Thermal coal production dipped by 0.3pc on the year to 9.47mn t in September, while total production including coking coal fell by 1.9pc on the year to 9.72mn t in August, National Statistics of Kazakhstan data show. Production of thermal coal rose on the month by 1pc from 9.34mn t in August.
Total thermal coal output declined by 1.9pc on the year to 79mn t in January-September, with production falling in seven of the first nine months of the year. Total coal output will now need to average about 15.5mn t/month for the rest of the year to hit Kazakhstan's annual target of 128.9mn t.
Unless October-December production surprise with significant growth, this official target has become increasingly unrealistic given Kazakhstan has averaged output of 9.5-10mn t/month so far this year.
Kazakhstan's coal railings rose by 1.5pc on the year to 77.8mn t in the first nine months of the year, with around 51mn t transported by rail domestically and around 25mn t exported, the transport ministry said last week.
Meanwhile, the ministry expected planned demand for household and municipal coal this heating season to total 7.3mn t, down by 154,000t from last year on a rise in gasification, and utilities were also holding healthy stockpiles.
With power plants now under less pressure to replenish stocks aggressively, domestic demand likely provided less support to Kazakh coal production than in previous years.
Unclear exports picture
Kazakhstan's dependence on Russian ports and railways has made the central Asian country extremely vulnerable to logistical snags this year and poses a significant risk to exports in the near-term.
Russian Railways (RZD) approved only 80,000t out of the planned 650,000t thermal coal shipments this month for a major Kazakh coal producer, sources said, with allocations expected to fall to zero next month.
Some sources added Kazakh coal shipments to Baltic ports might have stopped, with Kazakh producers delivering only 30,000t to Belarus and Poland border crossings so far this month.
Adding to the near-term uncertainty, Kazakh state-owned railway operator Kazakhstan Temir Zholy (KTZ) sharply raised rail freight tariffs by 24-28pc from this quarter.
