According to Kommersant, the Ministry for Economic Development has proposed forcing large coal producers (more than 1mntpa) to register over-thecounter coal contracts in order to facilitate the setting of the domestic coal price benchmark.
We are cautious on the possible regulatory step however see the timing for its implementation (if it happens) to be rather distanced from now. The potential implications would firstly include higher control of domestic coal pricing, however it would also further complicate it as it is already puzzled by high number of coal grades and specifications as well as integration among major steel makers. The key problem would remain: Russian coal pricing does not get the global benchmark pricing (based on Australian HCC) (i.e. priced with a discount) due to the inability to export efficiently which is a function of poor transport infrastructure. That makes the Russian coal market partially isolated from export demand/supply dynamics.