Synopsis:
Russia has abolished coal export duties tied to the rouble-dollar exchange rate, primarily impacting thermal, coking coals, and anthracite. This move, expected to save producers $1.1 to $1.5 billion annually, could notably benefit Mechel and Raspadskaya by up to 12% and 6%, respectively, if coal prices stabilize. Last year, Russia exported 220 million metric tons of coal, half of which went to China.
Article:
Russia recently made a significant decision, lifting export duties associated with the rouble-dollar exchange rate for major coal exports. The exemption covers thermal, coking coals, and anthracite, revealed by a government decree published on their official website. Originally introduced in October and anticipated to endure until the end of 2024, these duties have been eliminated, aiming to foster the coal industry.
According to experts cited by the Kommersant daily, this abolition could lead to substantial savings for Russian coal producers, ranging between $1.1 billion to $1.5 billion annually. BCS brokerage shared insights suggesting that this move might amplify profits for leading coal and steel entities like Mechel and Raspadskaya by 6% and 12%, respectively. However, these forecasts hinge on stable coal prices in the market.
The initial imposition of these duties was driven by a dual purpose: augmenting state revenue during a period of amplified military expenditure and counteracting increased exports propelled by the rouble's depreciation. Notably, the duty varied between 4% and 7%, contingent on the prevailing rouble rate. Interestingly, once the rouble reaches an exchange rate of 80 to the dollar, the duty automatically becomes null and void. As of now, the rouble hovers around 91 per dollar.
Last year, Russia's coal export numbers soared, reaching 220 million metric tons. Remarkably, about half of this volume was directed to China, underlining the significant role of the Chinese market in Russia's coal trade.
Conclusion:
Russia's decision to lift coal export duties marks a strategic step aimed at supporting its coal industry and potentially boosting profitability for major players like Mechel and Raspadskaya. This move, expected to save billions annually, aligns with efforts to bolster the sector amidst evolving economic dynamics. Additionally, Russia's prominence in the global coal market, especially its substantial trade with China, further emphasizes the significance of this policy change.
