MOSCOW. Nov 27 (Interfax) - Growing global demand for energy resources has given a boost to Russian railroad shipments destined for export, with shipments of coal and oil freight rising in October compared to the previous month. Ore producers also made a contribution. All this bolstered overall shipments in October by 2.5% compared to September. Analysts believe these trends might continue in November.

Growth amid foreboding

A general look at the dynamics of railroad shipments in Russia in October leaves the observer with mixed feelings.

On one hand, there is a hint of pessimism in the forecasts of Russian Railways (RZD) . Although the monopoly indicates that the economic stimulus programs launched by the world's leading economies have enabled it to improve the growth forecast for railroad shipments in 2012 from 2.7% to 3.3%, it recalls that the International Monetary Fund lowered its global economic growth forecast for 2012 from 3.6% to 3.5% in July and to 3.3% in October.

The official forecast for freight shipments in 2013 is still optimistic. RZD president Vladimir Yakunin said growth could amount to 2.5%. But in its conservative forecasts, the company allows for a decline of 0.5%. RZD factors in the risks of Russia being adversely affected by the economic dynamics in China and the eurozone, and relies on information from shippers, data on long-term contracts with the largest companies and forecasts for the domestic and foreign markets.

Overall shipments in October 2012 rose by just 1.25% year-on-year, while before this there was growth of at least 3% for several consecutive months, including 3.6% in September. Analysts attribute the slowdown in part to negative trends in the economy. RZD has not commented.

On the other hand, RZD figures show that shipments in October grew for the second consecutive month despite expectations of a seasonal decline in shipments of certain types of freight.

Resource exports

Coal shipments grew by nearly 4% overall in October. The growth was driven primarily by exports, both through ports and inland border crossings. "This dynamic is due to an increase in demand from the main importer countries as a result of growth in consumption - Japan, Korea, China, Britain, Turkey," RZD first deputy chief executive of corporate transportation services Sergei Kolesnikov told Interfax.

"Since consumption of coal for domestic needs remains at a stable level, the whole increase in production (7% year-on-year in January-October 2012) is going for export," said Alexander Metelkin, the head of marketing at LLC Transgarant, a railroad operator that is part of the Fesco transport group. The annual stockpiling of coal in Russia for the heating season has tapered off, and growth of coal shipments in Russia slowed to 1.7% in October from 7.7% in September and 12.8% in August. Year-on-year, the figure in October was down by 2.4%.

The head of marketing and research at Brunswick Rail, Andrei Tsyganov agrees with Metelkin. "When coal prices were at their peak, mining companies carried out a number of investment projects, which led to a delayed increase in production volumes. With the decline in domestic demand, part of the volume went to exports," he said.

There was also growth of exports in the oil sector. Overall they increased by more than 2%, while through border crossings by nearly 20%, which points to the growth of demand on Asian markets.

Back to normal

Railroad freight shipments in September rose 0.8% from August, when there was a decline. Despite analysts' forecasts, the largest category of freight - mineral resources shot up. Analysts attributed this to the recovery of the residential construction sector following the crisis, as well as to activity ahead of the Winter Olympics in Sochi.

"The recovery in shipments of this freight is taking place with a considerable time delay compared to other categories. This is due to the high capital-intensiveness of the construction sector. [Other sectors] have already largely recovered from the 2008-2009 crisis, but construction is still in the phase of 'fast recovery,'" Tsyganov said.

In October, however, shipments of construction materials began to get back to normal - they were down by 2.3% from September, although they were still 10% higher than a year earlier. Only imports of construction materials increased in the month. However, shipments of the second largest category of freight - coal and oil - helped considerably to support overall figures.

Meanwhile, in shipments of ferrous metals, inland imports continued to increase. "Growth of construction brings with it growth in construction of steel products. Therefore, demand for steel products cannot be fully met by Russian companies, which led to the growth of steel imports," Tsyganov said. Imports of such freight increased from Ukraine, Belarus, Moldova and Austria, RZD's Kolesnikov said.

Heavy metal

The metals markets themselves, however, remain in a slump, which in turn is having a negative impact on demand for coke.

"Due to the negative situation on the metallurgy markets, demand for it is not growing and, consequently, shipments of this freight are at a low level," Kolesnikov said. Domestic shipments of coke fell by more than 7% in October and export shipments were down nearly 5%, and the overall decline accelerated to 5.4%.

However, there was strong growth in shipments of ore, which jumped nearly 10% in October, surging 30% on export routes and rising 7% on domestic routes. Kolesnikov attributed the growth in iron ore shipments to an increase in miners' shipments to steel plants in Russia, as well as in China and Ukraine. Metelkin agreed, noting that land shipments increased by nearly 20%.

Fertilizer through ports

In the area of agricultural freight, two trends stand out in October. Fertilizer exports through Russian ports began to grow, surging 19.9% in October from the previous month following a drop of 15.5% in September, RZD figures show. "In Russia there was a seasonal drop in demand for mineral fertilizers, so part of the freight traffic was redirected for export," Tsyganov said.

"Similar fluctuations were seen in past years as well," Kolesnikov agreed. However, in general, "shippers report that the situation with export sales is difficult and shipping by sea has price advantages to land, particularly for long distances," he added.

On the other hand, October saw a decline in export shipments of grain. Export shipments, which make up nearly 40% of total grain shipments, fell by more than 7%, while overall grain shipments grew by 2.6%. "The drop in exports is due primarily to the low grain harvest in Russia in 2012. In such circumstances it's logical that we reduce grain exports, supplying the basic needs of regions most affected by the bad harvest," Tsyganov said.

Kolesnikov, however, attributes the drop in exports to the "uncompetitiveness of Russian grain on the international market due to the high prices in recent months."

Off season

"As statistics from previous years show, railroad shipments usually reach a seasonal peak in October," Tsyganov said. However, Kolesnikov believes that shipments of coal, crude oil and oil products, as well as fertilizer, might continue to grow in November. "A decline in shipping volumes is possible for construction freight, cement. These changes are of a seasonal nature," he said.

Looking further ahead, Tsyganov believes there might soon be a change in the situation with shipments of forest products within Russia "due to the introduction of the duty-free quota established after Russia joined the WTO." Russia's forestry industry has still not recovered from the crisis and prohibitive export duties, he said. Forest product shipments fell 8.5% from the previous month in October after dropping 4.4% in September and 0.8% in August.

Average daily freight shipments by Russian railways in October 2012 ('000 tonnes):

Breakdown of average daily freight shipments by Russian railways in October 2012 ('000 tonnes):