Reuters reports record high coal imports from Russia to China in July

Imports of Russian coal to China in July increased by 14% in annual terms and reached the highest levels in five years, reports Reuters. The agency notes that this became possible due to Western sanctions against Russia and discounts on coal for China.

Last month, Russia delivered about 7.42 million tons of coal to China, according to China’s General Administration of Customs. It is noted that this was the highest monthly figure since the start of collecting statistics in 2017: compared with 6.12 million tons in June and 6.49 million tons in July 2021.

EU restrictions on Russian coal supplies have forced Moscow to target buyers such as China and India and sell energy products at deep discounts. Coal from Russia, with a calorific value of 5,500 kcal, traded at about $150 per ton at the end of July on a cost and freight basis, the agency said.

China is expected to replenish its coal reserves by the winter heating season, which means more Russian coal will enter the country, Reuters added.

Formerly Vedomosti wrotethat Russia in July was able to redirect all the export volumes of coal falling due to EU sanctions from European countries to China and India. Due to this, deliveries abroad remained almost unchanged compared to the previous month, according to an expert review by the Center for Energy Development (CRE).

The study, citing data from the analytical agency Kpler, notes that in June sea coal exports from Russia amounted to 16.45 million tons (-0.6% compared to May, + 3.5% compared to June 2021). In most cases, coal is delivered to Asia by sea (according to the Association of Commercial Sea Ports, in 2021, coal transshipment in ports amounted to 202.7 million tons, and coal export, according to the Ministry of Energy, was 223 million tons).

Russian coal deliveries to the EU in July, according to the CRE, could have fallen by about 3 million tons compared to June, but the fall “was mainly offset by the redirection of volumes to the East – to India and China.” Total deliveries to the East could increase by 2.8 million tons, the review says. According to Kpler, the largest importers of Russian coal in July were China, where 6.7 million tons were delivered by sea, and India (2 million tons). The growth of deliveries to these countries for the month amounted to 42 and 60%, respectively.

In mid-June, coal prices in Europe, amid sanctions and problems with gas supplies from the Russian Federation, rose to a maximum since the beginning of March 2022. From June 14 to June 21, futures for energy coal delivered to the ports of Amsterdam, Rotterdam and Antwerp rose by almost 30% to $373/t (Vedomosti wrote about it on June 22).

In early April, the EU included in the fifth package of sanctions against Russia because of the SVO in Ukraine an embargo on the import of Russian coal. It has banned deliveries from Russia under long-term contracts since August 10, and spot purchases, according to Reuters, were stopped immediately after the introduction of restrictions.