Russian coking coal producer Raspadskaya's sales have recovered to close to what they were before the third quarter 2008 demand drop, a company official said on Tuesday.
Sales have reached 70 pct of that level with exports accounting for 30-35 pct of production, said Deputy General Director for Strategic Planning Alexander Andreev.
"Our strategy is to focus on raising coking coal sales to Russian coke and chemical plants. We're aiming to raise exports to 40 pct of production by 2011 and to diversify our customer base," Andreev told the Coaltrans conference.
"We release our results on April 15 and many people will be interested to see who we've signed new contracts with. In February, for example, we started shipping to the Ukraine," he said.
November 2008 was the toughest month for coal producers but the situation is beginning to improve as a result of discussions held late last year and in January between the government and coal producers, but the wider economic crisis will be quite a lengthy one, Andreev said.
"Late last year after various meetings in Kemerovo and Moscow the government finally listened to the requests of the coal industry and new rail tariffs were set. Tariffs rose 20 pct but we can live with them," he said.
Government support was also needed to ensure smooth transport of coking coal to Ukraine, he added. Last year over 1 million tonnes could not be shipped due to disputes over rail cars.
Producers have taken action to cut costs in response to the slump in prices and demand, Andreev said. Larger coking coal producers revised their budgets following the slump in steel and coal prices and adopted anti-crisis cost-cutting measures.
Coal producers will need to find new export markets for their production, principally in Asia.
Raspadskaya has had to adapt too to much shorter term contracts of only one to two quarters rather than long-term deals and to show flexibility and negotiate with steel clients in Russia unable to take the full contracted coal volumes, Andreev said.
"Many Russian coal companies were supplying under 4-5 year long-term contracts. When the November crisis came not a single company went to court to sue steel companies for non-fulfilment of contracts because they didn't take as much coal as they ordered. They sat and negotiated instead," he said.
Russian coal suppliers will need to balance sales into the domestic market and to growing export markets, he said.
South Korea, India and China will see a large number of infrastructure projects going ahead despite the global slowdown -- presenting an opportunity for Russian sellers to expand their customer base.
To do this coal companies must work with the government to ensure there are more Russian ports equipped to handle coking in addition to thermal coal exports to Asia, Andreev said.
Source: Reuters
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