Ukraine coal mining down 13% m-o-m in May

Coal mining in Ukraine decreased 13% m-o-m in May to 5.8 mmt, which includes a 14% m-o-m dip insteam coal extraction to 4.1 mmt and a 8% m-o-m cut in coking coal output to 1.8 mmt. In 5M13, total coal mining slid 7.2% yoy to 33.8 mmt, reflecting 7.6% and 6.1% yoy decreases in mining of steam and coking coal respectively.

Roman Topolyuk: The decrease in the sector’s operating performance comes as a result of worsening demand in both the coking and steam coal subsegments. The latter was reflected in the excessive stockpiling of finished coal at both the producers’ and consumers’ sites, as well as in a cut in market prices. A supply-side response to diminish production will help to neutralize the downward trend on the market in 3Q13-4Q14, however we don’t expect demand to return to a healthy state until 2014.