By Hector Forster and Dan Lalor

May 26, 2018 - Russian coal mining company Mechel said a shortage of rail wagons and infrastructure constraints in far east Russia, along with high stocks at ports, hit met coal sales in the first quarter.

Mechel, which operates coke and steel plants, said it shipped 1.6 million mt of coking coal, with external sales at 887,000 mt, down 27% from Q1 2017.

PCI coal sales in Q1 fell 8% to 313,000 mt, while external anthracite sales dropped 31% to 267,000 mt. External coke sales fell 29% to 168,000 mt.

"Our sales dynamics suffered negative impact from several factors, including persistent shortage of railway gondola cars in the Kemerovo Region and infrastructure limitations in Russia's Far East on the way to ports," CEO Oleg Korzhov said.

Mechel said it had built up an "extraordinarily high stock" of coking coal at ports in Q4 2017, which yielded extra sales volumes at that time.

It undertook planned repairs at the Neryungrinskaya coal washing plant early this year, which hit volume in Q1.

The company allocated more coking coal to Japan in Q1, over China, due to higher prices, with volumes to Japan up 10%.

PCI sales dropped due to weaker demand in Asia, with some sales moving into April loadings, Mechel said.

Coal mining volumes were maintained at the previous quarter's level, with the new Elga Coal Complex reaching a record quarterly mining volume, of 1.2 million mt of run-of-mine, or ROM, coal output, up 43% on Q1 2017.

Mechel's ROM coal production across the group hit almost 5 million mt in Q1, 2% down on Q1 2017 and flat on Q4 2017.

Mechel has been implementing a major revamp program and plans to gradually increase coal mining volumes to return to 2015-16 levels, which needed more in-house and contractor-supplied mining equipment. 

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