Analysts have named a timeframe for coal price recovery.

Coal prices could recover within the next three years to the favorable levels of the second half of the 2010s, according to a NEFT Research report, "Crisis in the Coal Industry. There Is a Way Out." While it's premature to state a definitive timeframe for the price rebound, experts expect the downward trend to reverse within eighteen months to three years. Furthermore, during this period, the "least efficient" producers (those whose production costs exceed their selling price, primarily South Africa, the United States , and Australia ) are expected to exit the market, driving up prices.

In this scenario, the nominal price of solid fuel could increase by an average of 5-7% (in ruble terms, 12-15%) by 2027. As of mid-September of this year, the price of a ton of thermal coal, depending on the port of shipment, was $70-83. For comparison, in late 2018 and early 2019, before the pandemiccovid-19 , which subsequently affected the volume of production and EXPORT of Russian products due to a decrease in demand, according to Argus, quotations for 6000 calorific coal on a FOB Vostochny basis exceeded $110.

The Price Index Center (PIC) also assesses the prospects for price recovery for high-quality thermal and coking coal as "highly probable" due to the risks of an accelerated decline in production in Australia and the lack of sufficient domestic resource bases in consuming countries. According to Evgeny Grachev, DIRECTOR of the PIC, the cost of coking coal has doubled over the past five years, and taxes on it have more than tripled. "From a profitability standpoint, major players are more interested in pursuing other commodity assets. This year, several major players have already announced staff reductions and production cuts due to low profitability," the expert stated.

According to the Ministry of Energy, 51 coal companies in RUSSIA are currently in the "red zone" due to the industry crisis, triggered by the loss of some traditional sales markets after 2022 and falling product prices. In May, the government , recognizing the coal industry's situation as a crisis, approved a number of support measures for them: tax, insurance, and fee payment deferrals (effective until December 1, with the possibility of extension at the discretion of a subcommittee chaired by Anton Siluanov); financial recovery programs with the assistance of direct beneficiaries, including restrictions on dividend and executive salary payments, as well as cost optimization; debt restructuring for companies; and logistical relief in the form of a 12.8% reimbursement of Russian Railways tariffs and subsidies for long-distance transportation.

As Energy Minister Sergei Tsivilev reported, support for 42 coal companies was considered.

The volume of profitable coal exports has declined since the beginning of the year, accounting for a 20-25% drop in product prices depending on the grade and port of shipment, to 43% from 73% last year. One of the main problems for exporters is expensive logistics (NEFT Research estimates the increase in Russian Railways tariffs over the past seven years at 176%, with inflation at 61%). Therefore, analysts believe that lower transshipment and rail freight costs (Russian Railways tariffs), as well as the "long-term nature" of export contracts, will stabilize the situation, helping coal producers operate profitably. Maintaining current prices without additional industry support measures (the current ones provided under the anti-crisis program may be insufficient) will lead to a significant decline in shipments to foreign markets. Therefore, a redistribution of the financial burden among all participants in the logistics chain is necessary, NEFT Research concludes.

Russian Railways, for its part, is recording a "gradual recovery" in demand for coal transportation, which had been declining throughout the year (down 3.6% year-on-year in January-August, to 213.8 million tons). During the three weeks of September, coal loading increased by 5.3% compared to the same period last year, including a 10.3% increase in export shipments. Previously, analysts at the Center for Central Information Systems (CCI) predicted an 8-10% increase in export loadings by the end of September, thanks to the weakening ruble and strengthening stock prices. At the same time, according to estimates from the Institute for Natural Monopolies Research (INM), the increase is largely due to seasonal factors and last year's low freight base, which makes the trend look favorable.

Despite the improvement in solid fuel loading in September for the first time since early 2025, Russian Railways continues to note the problem of inflated orders—when a shipper declares cargo for transportation, the carrier reserves infrastructure for it, and ultimately, the shipment is cancelled, the company representative continues. "Russian Railways' capacity is being reserved by shippers for large volumes of coal that are not backed by actual orders, due to both market factors and the low level of liability provided for such actions," he laments. Thus, in August, the total volume of coal undeclared for loading on the Russian Railways network, according to approved orders, amounted to 1.9 million tonnes, including 0.8 million tonnes for export  , 0.5 million tonnes of which went east. A total of 14.8 million tonnes of coal were exported by rail in August (an increase of 0.9% year-on-year).

Regarding the possibility of tariff preferences for coal deliveries (referring to the reduction factors of 0.895 and 0.4 for the tariffs in Price List No. 10-01, the key tariff document of Russian Railways, as well as quotas for coal exports from mining regions—the largest, approximately 100 million tons, was granted to producers in six regions in 2024— ), the Russian Railways press service points out that between 2014 and 2024, the company lost 428.3 billion rubles in revenue due to these preferences (excluding losses from transporting empty coal cars). "Additional preferences will lead to uncovered losses, which will be especially significant given the company's high debt burden," the Russian Railways representative added. An earlier version of the anti-crisis program proposed reinstating the 12.8% discounts and reductions on logistics concessions for deliveries to ports in the South and Northwest. To cover the losses associated with this support, Russian Railways required 60 billion rubles, but the Ministry of Finance rejected this proposal, citing the lack of such a budget line item.

According to NEFT Research, due to the abolition of reduction factors and planned indexation of Russian Railways tariffs (they were last increased by 13.8%), transportation costs have increased by 20-30% by 2022. Under these conditions, the report notes, despite reduced transshipment rates and cost optimization, exports have become unprofitable for most coal producers. The only route with near-zero profitability is the eastern route, the analysts note. The total profitability of the supply chain for deliveries to the East is 1.4 rubles per ton, or 21%. Russian Railways and ports enjoy the largest profit margins (46% and 53%, respectively). Gondola car operators are already operating at a loss, and the average loss ratio for coal producers exceeds 20%.

Reducing transshipment rates and Russian Railways tariffs will provide positive economics for all market participants—this approach will enable them to achieve a 21% operating cost margin. While such a margin does not guarantee long-term development and investment , it does provide an opportunity for all participants in the export chain to maintain production and preserve Russian coal's share of the global market in the face of declining production in less consolidated competitor countries, NEFT Research concludes.

Alexander Grigoriev, Deputy Director General of the Institute of Mining and Metallurgy (IPEM), believes that Russian coal producers "don't necessarily need" high prices on foreign markets—"a weak ruble would also be suitable." "Even at current prices, a change in the ruble exchange rate from the recent 80-plus rubles per DOLLAR to 100 rubles will increase coal export revenue by approximately 25%, which is equivalent to an increase in foreign market prices to $95 per ton FOB Far East at the current exchange rate," he explains. Global prices themselves will return to their historical levels provided a new growth phase in the economic cycle in CHINA, the Asia-Pacific region, and Southeast Asia. The coal export situation could stabilize if global prices rise significantly, although there are currently no preconditions for this, says Sergey Kazachkov, Partner in the Investments and Capital Markets practice at Kept. He also agrees that lower logistics costs will be a positive factor. This could make deliveries to some destinations profitable.

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