Russian coal makes its way to the markets – Newspaper Kommersant No. 211 (7412) of 11/15/2022

Exports of Russian coal fell by 7.5% in January-September, to 142.4 million tons, which was mainly due to a reduction in supplies of thermal coal to Asia, follows from Metal Expert’s data. Shipments fell 12% year-on-year to 54.9 million tons, while exports to Europe fell only 6% to 28.6 million tons, despite the embargo that took effect in August. At the same time, the export of coking coal increased by 27%, to 28 million tons, which were mainly sent to Asia. According to analysts, interest in Russian coking coal will continue to grow, as it is offered at a discount, and China is interested in diversifying supplies.

According to the results of nine months, the export of Russian coal fell by 7.5% in annual terms, to 142.4 million tons, follows from the data of Metal Expert, which Kommersant has read. Deliveries of thermal coal to foreign markets decreased by 13%, to 101.3 million tons, anthracite – by 18%, to 12.9 million tons. Export of coking coal increased by 27% to 28.2 million tons.

Russia does not disclose official statistics on energy exports. The EU imposed an embargo on the supply of Russian coal, which came into force in August 2022. According to the Ministry of Energy, due to the embargo and the cessation of coal supplies to Ukraine, Russia needs to look for a market for about a third of all coal exports, which in 2021 amounted to 223 million tons with a production of 438.4 million tons. The contraction of the markets has led to the fact that Russia sells coal at a discount that reaches 60%. First Deputy Prime Minister Andrei Belousov said in October that even under such conditions, coal companies show profitability.

Contrary to popular beliefs about the reorientation of exports to Asian countries, in the case of thermal coal, supplies there fell more than in Europe – by 12% in annual terms, to 54.9 million tons. Deliveries to the European market, despite the embargo that came into force in mid-August, decreased by only 6%, to 28.6 million tons. Such figures are explained by the high volumes of coal purchased by European consumers before the embargo. The decrease in exports to Asia is apparently due to the workload of the Eastern Polygon and high costs for exports from the European part of the Russian Federation. The only growing market is South America, where exports increased by 34% to 2 million tons.

In general, the production of thermal coal in January-September decreased by 3%, to 222 million tons. The decrease in exports was offset by an increase in deliveries to the domestic market, which increased by 6% to 66 million tons. According to Metall Expert, energy companies increased purchases by 4%, housing and communal services – by 10%, metallurgical plants – by 27%, cement producers – by 22%.

Almost all coking coal exported goes to Asia, according to statistics. Over the nine months, deliveries to the Asia-Pacific countries increased by 59%, to 22.9 million tons. Deliveries to Europe also increased by 35%, to 3.1 million tons. Russia is increasing exports to the countries of the Middle East and Africa by 81%, to 453,000 tons, and by 92%, to 98,000 tons, respectively.

Growth in demand for coking coal looks reasonable, says Boris Krasnozhenov from Alfa-Bank. “If we look at the top 10 steel producers in the world, India’s steel production grew by 6.4% in the first nine months of 2022, Iran’s steel production grew by almost 10% over the same period. In China, steel production fell by 3.4%, while in September production increased by 17.6% compared to September 2021, ”the analyst cites the data. According to him, China is interested in diversifying coking coal supplies from Australia. Given the discount that Russian exporters can offer, coking coal supplies from Russia can be expected to increase.

In addition, the expert draws attention to the ongoing development of large projects for the extraction and production of coal concentrates from coking coal, including an increase in production at the Elginskoye ELSI field, an increase in production by Kolmar in Yakutia and the Northern Star project in Taimyr. These volumes are focused primarily on the Asian markets, emphasizes Boris Krasnozhenov.

Evgeny Zainullin