India’s thermal coal imports from Russia that have seen a rise in the past three months are likely to fall by 30% m-o-m in September to 1.40 mnt, according to provisional numbers compiled by CoalMint.
Russian thermal coal has been gaining popularity in the Indian sponge iron, brick kiln, and cement sectors over the last few months and buyers have been quite eager to book high-CV thermal coal.
However, Russia is facing supply issues of late and this may play a key role in bringing down India’s thermal coal imports in the current month.
Reasons for Russia’s supply issues:
Long coal vessel waiting period (for cargo booked previously) for discharge, as bulk storage facility in Poland and Rotterdam is limited.
Increased congestion in the Baltic region, hampering vessel movement as Europe scrambles for energy supplies and ships carrying LNG, diesel and crude to the region are keeping the routes occupied for a longer time.
Difficulties for Russian cargoes in securing Protection and Indemnity (P&I) insurance. These cover all maritime liability risks associated with the ownership and operation of a vessel.
The International Group of P&I Clubs has been forced to cancel cover mid-voyage on an unspecified number of shipowners carrying Russian cargoes in breach of EU sanctions, citing poor drafting of the original regulations as the reason for providing the cover in the first place.
This is because the club’s new circular, valid from 10 August, says that the involvement of an EU entity in the carriage of Russian coal or other solid fossil fuels to any destination whatsoever and whether inside or outside the EU would be in breach of EU sanctions.
Russian thermal coal shipments coming to India
The top key buyers of Russian thermal coal in September are Swiss Singapore, Coastal Gujarat Power, Rashmi Group, JSW Ispat and Bhushan Power.
In the sponge iron sector, buyers are booking Russian coal (high FC and low VM) on stock and sale basis in order to blend the same with domestic coal, or with Australian Carmichael mine coal.
On the other hand, the cement and brick kiln sectors are seeing high demand for the high calorific value Russian coal, which is cheaper too.
In September, Russian 6100 NAR grade (58-60% FC) was mainly sold at $185-190/t CFR India, Australian 5500 NAR grade was available at $225/t CFR India, while South African 5500 NAR was at $230-235/t.
Short-term outlook
India’s coal imports from Russia are likely to be in a tight range in the coming months with vessel availability likely to be an issue with the start of winter restocking by various countries, starting October.
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