In July, Russia managed to find buyers for all the coal that the EU refused due to the imposition of sanctions on the federation, but at an “extremely large discount”. Exports have been redirected mainly to China and India and remain almost unchanged. In June, the export of coal from Russia by sea amounted to 16.45 million tons, it is clear from an overview of analysts from the Russian non-governmental Center for Energy Development, quoted by “Vedomosti”. According to experts from the center, the discount in the price of Russian coal exported to the East is “extremely large”. Calculations show that Russian coal is selling at discounts of more than $200 per tonne to the regional benchmark, amounting to a discount of around 45-50%. The discount is more than 10 times larger than the one made at the beginning of the year.
Global coal consumption is on track to return to record levels since 2013.
Indian companies buy Russian coal en masse in non-dollar currencies Indian companies are increasingly using currencies of various Asian countries to pay for Russian coal imports.
The redirection of exports will depend on India’s willingness to increase purchases of Russian coal as an alternative to Australian coal and provide bulk carriers to transport it.
Prices not lower than 100 dollars per ton suit the Russian producers. According to Rodionov’s forecast, in the coming months the price of coal will be higher than 250 dollars per ton. Coal deliveries to Asian countries are mostly carried out by sea. According to the Association of Commercial Seaports, the amount of coal transshipped in Russian ports in 2021 amounted to 202.7 million tons, and exports equaled 223 million tons, according to data from the Ministry of Energy, cited by the Russian edition of Forbes. The amount of Russian coal delivered to the European Union in July was about 3 million tons less than a month earlier. However, the decline “is mainly compensated by the redirection of volumes to the east – to India and China”, the Center for Energy Development points out. The largest importers of Russian coal by sea in July were China (6.7 million tons) and India (2 million tons), according to Kpler data. The growth of deliveries to these countries for the month amounts to 42% and 60%, respectively. According to experts, one of the factors for the increase in the export of solid fuel to Asian countries in June is the changes in the rules for transporting coal on the eastern lines of the Russian railways, namely on the Baikal-Amur highway and the Trans-Siberian railway.
On July 1, the Russian government returned quotas for coal producers in the famous coal-mining Kuzbass, Khakassia and Tuva regions for priority export to the east. The amount of coal loaded on the Russian railways in the January-July period decreased by 5.5% on an annual basis, and in the first half of the year the decrease was equal to 5%. This decline is, rather, due to the reduction of supplies for the domestic market. According to the forecast of the Energy Development Center for the month of August, the levels of coal exports will remain unchanged compared to those in July. However, actual deliveries will depend on the dynamics of exports to India, Turkey and the Middle East.
EU importers are currently looking for alternatives to Russian coal. Thus, imports of the Old Continent from the USA, Colombia, Australia, Kazakhstan and Tanzania have increased. In early April, the EU adopted a fifth package of sanctions on Russia and imposed an embargo on the federation’s coal. Russia’s Energy Ministry says that in 2021, Russia’s coal exports to the EU will amount to 48.8 million tonnes, with thermal coal deliveries amounting to 45.3 million tonnes and coking coal to 3.45 million tonnes. According to Kiril Rodionov, an expert from the Institute for the Development of Technologies in the Fuel and Energy Complex, the success of the redirection of coal exports will be able to be assessed by the end of September, when the effects of the Russian import ban, which came into force on August 10, are being calculated coal in the EU.
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