Coal Energy mining falls 2.5% mom in January

Coal Energy’s mining fell 2.5% mom to 139 kt in January (+3.3% yoy), with coking coal representing the steepest monthly decline (17% mom) to 15 kt. Coal recovery from waste reprocessing improved 17% mom to 8.5 kt amidst the ongoing ramp up of its enrichment facility, launched in October 2012. In 7MFY13, total coal mining was 15% higher yoy at 1.06 mmt and waste reprocessing grew 6% yoy to 150 kt.

Roman Topolyuk: The continuing slide of steam coal mining by Coal Energy reflects the weakness of both domestic and export markets, while it’s worth noting that the company outperformed the mining industry in January: coal supplies from Ukrainian mines declined 11.4% mom (and supplies to power plants declined 10.2% mom) last month. Some destocking of steam coal, which occurred in January (by 8% from end-December to 5.2 mmt) might draw increased demand, though not too quickly. There is also slight improvement in coking coal prices in February (+2-3% mom) in Ukraine that may be a result of a strong rebound in steel production in January. We expect the steel market recovery will be reflected in improved supplies of Coal Energy’s coking and dual-purpose coal.