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

LAUNCHESTON, Australia (Reuters) – Russia appears to have managed to offset a drop in coal exports to Europe after the February 24 attack in Ukraine with higher sales to Asia, particularly China and India.

However, a closer look at the coal import and export situation in the Asia-Pacific region shows that prices of coal produced in Indonesia and Australia have remained firm, while sales of coal produced in Russia have struggled to expand despite the drop in prices.

Russian coal exports 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, down from 5.87 million tonnes in July.

China’s overall imports of Russian coal grow 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 tonnes in August, up from 1.51 million tonnes in July and 1.69 million tonnes 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 tonnes before Russia’s attack on Ukraine came.

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

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

Russian coal exports to Asia have fallen despite falling prices. According to the latest research from consultancy McCloskey, Russian thermal coal with a calorific value of 6,700 kcal per kilogram was priced at $158.50 a tonne at the eastern port of Vostochnu, after coal prices soared in March following an invasion Ukraine is about half 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 Russian coal formation is at a disadvantage even before the war, in contrast to the same grade of coal from other exporting countries. .

Meanwhile, the price of 6,000 kcal/kg coal at Australia’s Newcastle port hit a record high of $452.81/t in the week ending September 9, about 80% of what it was before the Ukrainian invasion, according to Global Call. .

Also more reflective of overall prices, Australian 5,500 kcal/kg calculated by Argus was priced at $198.70 per tonne in the week ending 9 September. That’s below the all-time high of $284.20 reached in the week ending March 11, but 28% higher than the week before the Ukrainian invasion of $155.43.

Indonesia, the world’s largest exporter of thermal coal, exports mainly low calorific coal, mainly to China and India. The Indonesian price, which has a calorific value of 4,200 kcal per kilogram, was $82.58 per metric ton in the week ending March 9, up from $79.07 in the previous week, it broke below a record high of $120.86.

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 take into account the calorific value and the 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 dollars per ton, while the price from Australia is 36.13 dollars per kilogram, about 50% of the price superimpose

Despite the fact that Russian products are significantly cheaper, expanding sales into Asia seems to have been difficult. Increased exports to China and India are not enough to compensate for declining exports to Japan, South Korea, Taiwan and others.

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