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Russia is set to surpass Australia as a significant coal exporter to India, with plans to enhance coal shipments in the current year compared to 2022, local media reported.
India is witnessing a surge in demand for Russian coking coal from both private and state-owned steel firms, Sputnik India reported, citing coal trader. As acceptance of Russian coal grows within the Indian steelmaking sector, it is expected to gradually replace Australian coking coal supplies, he added.
High-priced Australian coking coal and disruptions in its imports helped Russia to expand its export of coking coal to India. Australian coking coal was selling at a high of $350/t in recent weeks.
Russian coking coal is being purchased by major steel producers such as JSW, Kalyani, as well as government-backed SAIL and Rashtriya Ispat.
India, the world's second-largest steel manufacturer after China, heavily relies on coal imports. In 2022, Australia accounted for nearly half of India's overall coal intakes, with approximately 70 million tonnes.
Russian coal exports to India witnessed a significant year-on-year increase of 45% to 23 million tonnes during the January to October period, compared with around 8 million tonnes in 2019, the trader said.
The rise in India's coal receipts from Russia can be attributed to Europe's shift away from Russian coal since the start of the conflict with Ukraine. As European countries sought alternative coal sources, Russia began exploring new markets such as India and China.
To attract new buyers, Russia initially offered significant discounts of around 30-40% compared to other exporters. However, as coal market volatility subsided and prices stabilized, Russian exporters now face challenges in matching the prices offered by competitors like Australia.
Despite these challenges, India continues to purchase Russian high-quality anthracite. Russia is the primary source of this high-grade coal, and India has limited options to meet its anthracite requirements. However, for thermal coal, India has cheaper alternatives available, such as imports from countries like South Africa or Indonesia.
Russian exporters have experienced increased freight rates and marine insurance costs due to attacks on merchant vessels in the Gulf of Aden. This put pressure on Russian companies to ship coal to India.
(Writing by Riley Liang Editing by Emma Yang)
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