India’s imports of Russian coal continue to gain momentum as elevated prices of other exporting countries and a domestic supply crunch continue to incentivize traders to catalyze the steep discounts offered by Russian traders.
Over the last few months, India’s average coal imports from Russia have been at 1 mnt, while shipments in June alone are expected to touch 1.5 mnt, up by a whopping 67% m-o-m, CoalMint’s data showed.
The share of thermal coal has seen a remarkable rise this month as cement and power plants emerged as the biggest buyers of Russian coal, bringing in a total of 0.7 mnt.
*Qty in mnt
As per CoalMint’s vessel line-up data, Ultratech Cement, JSW Mineral, and Coastal Gujarat Power were the biggest buyers of thermal coal this month.
The highest quantity of coking coal was bought by JSW Steel, while Jindal Steel & Power Ltd was the major buyer of PCI, and JSW Steel, of anthracite.
Russian miners offer discount
Despite global sanctions, India traders opted to purchase Russian coal as miners offered steep discounts up to 30%.
As per market participants, low CV 4800 kcal/kg NAR grade offers from South Africa were heard at $110-120/t FOB, lower by $30/t from South African origin.
High CV Russian coal demand also remained strong as its South African and Australian counterpart of 6000 kcal/kg NAR traded above $300/t FOB in June.
In case of coking coal the same is being offered at a discount of $200/t against Australian and US origin coals.
Offshore units of several Russian coal traders such as Suek AG, KTK, and Cyprus-based Carbo One were also heard to be responsible for the majority of the shipments.
Disruption over payment also remained limited as few cargoes were also heard to be booked in dollars, sources said.
Major shift in trade flows
With sanctions by western countries, Russian coal has largely been finding its way into Asia with the two biggest buyers being China and India.
Russia’s sales of thermal coal to Europe, however, have dropped to 10-15% in its total current export volumes, from the 30% seen before the invasion.
Exports to Europe are set to grind to a halt in August when the ban on Russian coal shipments takes effect.
This has further forced European utilities to rebuild stockpiles from alternative sources such as South Africa and Australia, making Indian procurement from these countries unviable.
Short-term outlook
Indian demand for Russian coal is likely to further grow in the coming weeks as a weak domestic market, reeling under muted demand and financial constraints, would continue to seek cheaper alternatives. Russian coal would thus be preferred over traditional markets such as South Africa and Australia.
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