Rail cargo transportation volumes ascended 3.0% YoY in July (up 3.4% in 7mo12), while cargo turnover, a more volatile indicator, was also firm, edging up 3.9% YoY higher last month (up 5.2% over 7mo12).
The railway cargo statistics for July result in a mixed reading. On the one hand, cargo transportation growth is still resilient to the global headwinds. As the story continues to be shored up by internal demand, while global headwinds have already dented growth expectations, a deeper look reveals that the former was driven by a one-time event and the first signs of a slowdown came from elsewhere. Namely, the support came from the export duty lag in July, following the ease in oil prices in 2Q12, which provided an impetus to the transportation of oil and oil products, one of the key cargos. Still, due to its temporary nature, this driver is clearly unsustainable. As our macro team believes, unless the oil price stays above USD 105/bbl, the domestic factor might fade towards the year-end and spark a slowdown in 2H12. Still, the strong start to the year lifts concerns of any tangible downside risk to our FY12 volume growth target of 3.0% (Russian Railways expect 2.8%).
With robust consumer demand, there was no reason for container-based haulage to suffer and it rose 12% YoY in July. As a high-beta segment (hence, more volatile) and amid rouble weakness (which might hit imports after a lag of several months).