OREANDA-NEWS. In 2014, freight volume was at 1,227.0 mln tonnes (down 0.8% or 8.9 mln tonnes year-on-year), while freight turnover (excluding empty runs) was at 2,298.3 bln tonne-kilometres (up 4.6% or 102.5 bln tonne-kilometres) according to RZD.

Coal. In 2014, 315.4 mln tonnes of coal were transported (up 1.5% year-on-year), while freight turnover amounted to 843.9 bln tonne-kilometres (up 8.8% year-on-year).

Growth in coal transportation volumes and turnover in 2014 was largely influenced by Rouble devaluation versus the US Dollar and Euro. As a result, export volumes increased, since the companies benefit from selling coal abroad while their key expenses are denominated in roubles. Other factors include the development of coal deposits, and continued international demand for coal, particularly in the Asia-Pacific region.

Growth in freight turnover for coal resulted from increasing transportation distance - as more freight is transported to the Far Eastern ports for onward shipment to Asia.

Coal prices in December 2014 were at USD 71.3 per tonne - a USD 10.4 decrease compared to December 2013.

Oil and petroleum products. In 2014, transportation volumes for oil and petroleum products, excluding liquefied petroleum gas, were at 256,5 mln tonnes (up 2,5%), with freight turnover at 333,1 bln tonne-kilometres (up 5.0%).

Freight turnover for oil and petroleum products increased primarily due to growth in domestic turnover from 132.3 mln tonnes in 2013 to 138.9 mln tonnes in 2014 (up 5%).

According to the Energy Ministry's Fuel Energy Complex Central Dispatching Department, oil and gas condensate production in Russia in 2014 increased by 0.7% y-o-y to 526.8 mln tonnes. Daily average production in 2014 amounted to 10.578 mln barrels per day, which is a record for the whole post-soviet period.

Increase in oil production was not affected by sanctions imposed by the US and the EU against the Russian oil production sector, nor steep decline in oil prices in H2 2014.

Increased domestic oil production has had a positive impact - primarily on rail transportation volumes. This is growth is mainly due to tax incentives for oil refining, and the fact that Russian Railways' tariffs remained unchanged (the monopoly is set to index transportation tariffs in 2015), and the commissioning of new and modernised refining capacities in Siberia and the Urals regions has also had an impact. Growth in petroleum products transportation was primarily due to increased fuel oil transportation volumes.

Brent crude prices at the end of 2014 were at USD 57.3 per barrel, as prices continue to decline.

Liquefied petroleum gas. In 2014, transportation volumes were at 30.1 mln tonnes (up 7.3%), with freight turnover at 70.9 bln tonne-kilometres (up 7.7%). Despite the growth in transportation volumes, it is worth noting a significant decrease in LPG prices (almost a twofold drop as compared to 2012).

Construction materials. In 2014, the total volume of construction materials freight was at 141.1 mln tonnes (down 17.1%), with freight turnover at 114.5 bln tonne-kilometres (up 4.0%). Delivery volumes decreased due to the completion of Sochi Olympic Games infrastructure construction projects in Sochi.

Ferrous metals. In 2014, transportation of ferrous metals was at 71.8 mln tonnes (up 2.5%), with freight turnover at 113.3 bln tonne-kilometres (up 4.2%).

Steel prices stood at USD 450 per tonne, down by 16.3% as compared to December 2013.

Iron Ore. In 2014, transportation of iron ore and manganese ore amounted to 108.6 mln tonnes (down 1.9%) and freight turnover amounted to 108.5 bln tonne-kilometres (down 2.6%).

The price of iron ore stood at USD 71.3 per tonne, down almost twofold year-on-year.

Scrap. In 2014, transportation of scrap remained flat at 16.7 mln tonnes, freight turnover was at 15.2 bln tonne-kilometres (up 8.7%).

Non-ferrous metals, ores and concentrates. In 2014, freight volumes for non-ferrous metals equalled 19.3 mln tonnes (down 6.5%), freight turnover was at 34.0 bln tonne-kilometres (down 5.7%).

Copper prices were at USD 6,230 per tonne, down 16.9% year-on-year.

Grain. In 2014, grain transportation was at 18.2 mln tonnes (up 32.3%), freight turnover was at 31.2 bln tonne-kilometres (up 14.1%). Grain prices in December 2014 were at USD 240 per tonne, up 4.7% year-on-year.

Fertilisers. In 2014, fertiliser transportation volumes was at 49.2 mln tonnes (up 4.7%), freight turnover was at 80.2 bln tonne-kilometres (up 3.9%). DAP was priced at USD 560 per tonne, up 23.1% year-on-year.

Rolling stock production in the "1520mm region"

In 2014, CIS plants produced ca. 64,900 units of rolling stock, which is 26% less than in 2013. Russian plants produced ca. 54,600 units of rolling stock, down 7% year-on-year. Ukrainian factories produced ca. 6,200 units of rolling stock, 3.8 times less than in 2013. Prices for gondolas, platforms, hoppers, and oil tank cars remain almost stable, ranging between USD 27,000 and USD 44,000 per unit.

Gondolas. In 2014, around ca. 35,700 gondolas were produced, which is 4% less than in 2013. Gondola prices at the end of the year were between in USD 27,000 and USD 29,000 per unit.

Oil tank cars. In 2014, about 5,300 oil tank cars were produced (2.4 times less year-on-year). Oil car tank prices ranged between USD 29,000 and USD 31,000 per unit.

Hoppers. In 2014, ca. 9,500 hoppers were produced (down by 29% year-on-year). Of this number, around 3,500 were grain hoppers, around 2,700 were mineral hoppers, around 2,100 were cement wagons and around 1,200 were other hoppers. By the end of 2014 grain hopper, mineral hopper and cement wagon prices ranged between USD 32,000 and USD 36,000 per unit.

Box cars. In 2014, around 4,700 box cars were produced (down 41% y-o-y). Box car prices by the end of 2014 ranged between USD 39,000 and USD 43,000 per unit.

Platforms. In 2014, around 3,000 fitting platforms were produced, down 22% y-o-y. Also, around 2,700 universal platforms were produced in 2014, down 2% y-o-y. Prices for various platforms at the end of 2014 ranged between USD 32,000 and USD 38,000 per unit.

Information on rolling stock production is taken from the Rolling Stock Market data service.

Russian railcar market

In December 2014, gondola tariffs stood at RUB 400-450 (USD 7-USD 8) per day. Daily tariffs for leasing boxcars in December 2014 stood at USD 13-USD 22 (RUB 700-1,200). Daily tariffs on universal and fitting platforms remained at USD 14-USD 15 (RUB 800) and USD 13-USD 14 (RUB 750-770), respectively. Grain hopper tariffs stood at USD 14-USD 15 (RUB 800) per day. Mineral and cement hopper tariffs stood at USD 10-USD 11 (RUB 600). Daily tariffs on oil tank cars ranged between USD 9 (RUB 500) and USD 15 (RUB 800). Gas tank car tariffs remained flat at USD 22-USD 27 per day.

Estimates are based on the USD rate of 55 Roubles per 1 US Dollar. It is worth noting there was a significant depreciation of the Russian Rouble versus the US Dollar in September-December 2014. Rouble devaluation over these four months was 52% and since start of the year it reached 72%.

Russia's rolling stock fleet

Brunswick Rail estimates that in December 2014 idle stock decreased to 218,000 units, around 18% of the total fleet. At the same time we estimate that actual surplus rolling stock in December 2014 amounted to about 95,000-100,000 units