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Russia’s Coal Exports to Asia Slump Amid Intense Competition

The lower prices of coal from major exporters Indonesia, South Africa, and Australia are weighing on Russia’s capacity to sell more of its coal to Asia, which has become Moscow’s primary export market after the West slapped embargoes on its coal in 2022.  

Russian exports of both thermal and metallurgical coal to Asia slumped in February by 21.6% year-over-year, to around 8.48 million metric tons, according to data from Kpler reported by Reuters’ columnist Clyde Russell.

Despite the fact that Kpler estimated Russia’s February 2024 coal exports to be slightly higher than in January 2024, Moscow had seen six consecutive months of falling coal sales in Asia, Russell notes.  

Russia turned east to Asia to place its coal after the EU and its Western allies banned imports of Russian coal in the summer of 2022 after Putin’s invasion of Ukraine in February of that year.

China, South Korea, Turkey, and India are currently the top importers of coal from Russia. These countries received over 80% of Russia’s coal exports between August 2022 and July 2023, compared with 47% from August 2021 to July 2022, the U.S. Energy Information Administration (EIA) said in an analysis early this year.

But competition from top exporters Indonesia, Australia, and South Africa and their competitive export prices in India and China, have been squeezing out Russian coal exports to Asia.

Domestic logistical challenges are also weighing on Russia’s coal exports.

According to the EIA, “limited eastbound rail infrastructure from the Kuzbass region in Western Siberia, where coal production is centered, leads to congestion, delays, and longer turnaround times.”

Higher exports from Russia’s largest coal transshipment port, Vostochny, on the Pacific coast, have led to railway and seaport bottlenecks, the EIA notes.

In the first seven weeks of 2024, Russia’s coal shipments dropped by 14% year-over-year, according to BIMCO, the world's largest direct-membership organization for ship owners, charterers, shipbrokers, and agents. Volumes have been declining since October 2023 when logistical challenges started to emerge, BIMCO said in an analysis last month.    

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By Tsvetana Paraskova for Oilprice.com

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