Column: Russian coal struggles to increase sales in Asia despite falling prices | Reuters

LAUNCHESTON, Australia (Reuters) – Russia appears to have managed to offset a decline in coal exports to Europe after Ukraine’s invasion on February 24 with increased sales to Asia, particularly China and India.

After Russia’s February 24 invasion of Ukraine, it was thought to have succeeded in offsetting a decline in coal exports to Europe with increased sales to Asia, particularly China and the United States. ‘India. FILE PHOTO: Nakhodka, Russia, June 13, 2022. REUTERS/Tatiana Meel

However, a closer look at the situation of coal imports and exports in the Asia-Pacific region shows that the prices of coal produced in Indonesia and Australia have remained firm, while sales of coal produced in Russia have suffered. difficult to increase despite falling prices.

Russian exports of coal of all grades to Asia fell to 10.15 million tonnes in August, the lowest in four months, according to research firm Kepler. It was 12.16 million tonnes in July and 12.42 million tonnes in June.

Exports to China totaled 5.01 million tonnes in August, compared to 5.87 million tonnes in July.

Overall imports of Russian coal from China increase when land imports are included. However, the transport capacity of the railway connecting the two countries is tight, and in order to significantly increase Russian exports to China in the future, we will have no choice but to rely on sea transport.

Russian exports to India totaled 1.8 million tons in August, compared to 1.51 million tons in July and 1.69 million tons in June.

India has been the most successful country in expanding Russian coal exports to Asia, with Russian imports more than doubling from 300,000 to 700,000 tons before the Russian invasion of Ukraine.

Japan, the largest importer of Russian coal in Asia before the Russian invasion and the region’s third largest coal importer, saw its imports decline after the invasion. 780,053 tonnes in July fell to 408,049 tonnes in August. Last August, it was 1.37 million tons.

South Korea, the fourth-largest coal importer in Asia, is also reducing its imports of Russian coal. It was 2.34 million tonnes in July and 2.85 million tonnes in June, but decreased to 1.05 million tonnes in August.

Russian coal exports to Asia fell despite falling prices. According to the latest research from consulting firm McCloskey, Russian thermal coal with a calorific value of 6,700 kcal per kilogram was priced at $158.50 a ton in the eastern port of Vostochnu, after coal prices spiked in March following the invasion of Ukraine. the price of 315 dollars in the middle.

It should be noted that the current price is lower than the pre-invasion price of $254, and the formation of Russian coal is at a disadvantage even before the war, unlike the same quality of coal from other exporting countries. .

Meanwhile, the price of 6,000 kcal/kg of coal at the Australian port of Newcastle hit a record high of $452.81/t in the week ending September 9, around 80% of what it was before the invasion of Ukraine, according to Global Call. .

Also more representative of prevailing prices, the Australian price of 5,500 kcal/kg calculated by Argus was $198.70 per tonne in the week ending September 9. This is below the all-time high of $284.20 reached in the week ending March 11, but 28% higher than the week before the Ukraine invasion of $155.43.

Indonesia, the world’s largest exporter of thermal coal, mainly exports low-calorific coal, mainly to China and India. Indonesia, which has a calorific value of 4,200 kcal per kilogram, was priced at $82.58 a ton in the week ending March 9, down from $79.07 the previous week.

Indonesian prices for this grade have returned to pre-invasion levels, likely because Japan and South Korea, like European countries, prefer higher calorific grades, limiting buyers.

Coal is not interchangeable between different grades, as buyers also consider the calorific value and impurities it contains when buying coal.

Adjusted for calorific value, the calorific value of 1,000 kilocalories per kilogram from Russia shipped to Asia is $23.66 per ton, while the price from Australia is $36.13 per kilogram, or about 50% of the price.

Despite the fact that Russian products are significantly cheaper, it seems that expanding sales to Asia has been difficult. Rising exports to China and India are not enough to offset declining exports to Japan, South Korea, Taiwan and others.

(The author is a columnist for Reuters. This column is based on the personal opinion of the author.)

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