MOSCOW (Pakistan Point News / Sputnik - 17th August, 2020) The Russian Energy Ministry is constantly analyzing the situation in the Russian coal industry given the impact of the coronavirus infection on the market and taking into account the environmental agenda, and the forecast for the expected drop in coal exports in 2020 by 10-22 percent is still relevant, Energy Minister Alexander Novak said.
In an article written for Energy Policy magazine, Novak says that in the first half of 2020, demand and prices in the coal market decreased compared to 2019. The measures introduced to combat the coronavirus pandemic played a significant role in this. The tightening of the climate agenda also has a strong impact on the coal industry. Demand is also declining in the domestic market, which is associated with a slowdown in economic activity amid the COVID-19 epidemic, Novak said.
Thus, in the second quarter of 2020, coal supplies to the domestic market decreased by 11.6 percent year-on-year, while exports dropped by 5.6 percent. As a result of the decrease in demand, world prices for coal are also falling � the average price for thermal coal in the first quarter of 2020 fell by 10 percent (from $63 to $57 per tonne). Thus, some companies are forced to cut production in order to realize overflowing stocks. As a result, the volume of production in the second quarter of 2020 decreased by 9.6 percent year-on-year
"If we predict the average annual figures, the consumption of coal in the domestic market in 2020 as a whole may decrease by between 4 and 12 percent. We can see a gradual recovery in demand with a slight growth in the fourth quarter. The exports of Russian coal this year may decrease in the range from 10 to 22 percent, mainly on the western direction. In this regard, we are in the regime of continuous analysis of various scenarios for the development of the situation in the coal industry and are ready for countermeasures," Novak said.
In 2019, Russia's coal exports amounted to 220 million tonnes, and the total production was about 440 million tonnes, as Novak previously said. In May, the minister estimated that the drop in coal exports may amount to 10-22 percent this year.
