China accepts coal

China accepts coal



Russia increased coal exports to China in August amid the entry into force of the European coal embargo. According to Chinese customs, shipments increased by 15% compared to July, to 8.4 million tons, and in annual terms, the growth is 57%. Increases purchases and India. At the same time, the discount of Russian exports in relation to Australian coal reaches 70%, despite the increased logistics costs of Russian coal miners.

Russia in August increased coal supplies to China by 57% in annual terms, up to 8.4 million tons, follows from the data of Chinese customs. Compared to July, the growth was 15%.

In August, a European embargo on coal purchases from Russia came into force, which is now forced to redirect its exports to other countries. The main buyer of Russian coal at the moment is China, the second place belongs to India, which has not yet published customs statistics for August. According to the CoalMint agency, imports of Russian coal into the country reached a record 2.3 million tons in August. Including 1.8 million tons of thermal coal were delivered, as India is experiencing a shortage of its own coal, and Russian cargo is offered at competitive prices. Increased purchases of Russian coal and South Korea, whose official authorities planned stop buying from Russia. In August, it imported 2.6 million tons of coal, which is 39% more than August 2021 and 23.3% more than July this year.

Europe this year may purchase up to 100 million tons of coal, which will be the largest volume since 2017, analysts at Noble Resources International say. Cause growth purchases are high gas prices. Instead of Russia, South Africa will become the most significant supplier of high-quality coal to Europe, according to Argus Media. Russia will redirect supplies not only to China and India, but also to Turkey.

Despite the growth of coal exports to Asia, the reduction in supplies to Europe leads to a decrease in production.

Kuzbass, the main region of the coal industry, in August reduced production by 11.2% yoy, to 18.2 million tons. In August, Kuzbass shipped 17 million tons by rail, which is 11% less than a year ago. Most of all, deliveries in the western direction fell by 1.3 million tons, to 8.4 million tons. In the eastern direction, the reduction amounted to 200 thousand tons, up to 4.6 million tons. Coal reserves increased by 3.3 million tons to 18.4 million tons.

Since the capacities of the Eastern Polygon are not sufficient to redirect Russian coal export flows, companies are now shipping coal to Asia, including through the ports of the Baltic and the Black Sea. According to the presentation of the director for port and railway projects of the UMMC, Irina Olkhovskaya, out of 78 million tons of coal supplied to the Asia-Pacific markets in January-July, only 65 million tons were sent through the ports and border crossings of the Far East, and the rest through the ports of the northwest and south . Government like wrote Kommersant is considering returning discounts on rail transportation of coal, but only for deliveries to the ports of the northwest.

Russian coal continues to trade at a discount of about 65-70% to Australian counterparts on an FOB basis, making it attractive enough for Chinese consumers to buy, says Alfa Bank's Boris Krasnozhenov. According to his estimates, the FOB price of 6000 kcal thermal coal in the port of Taman is $112. Transportation by Panamax and Capesize class ships from Taman to South Korea, according to world consulting agencies, is $44 and $25 per ton, respectively. Thus, the analyst says, coal on a basis with delivery to Chinese ports (CFR) should cost about $140-160 per ton to maintain profitability when delivered through the Black Sea ports. “It should be noted that large coal companies can have their own wagon fleet, which reduces their transportation costs,” Mr. Krasnozhenov adds.

Evgeny Zainullin



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