NEW DELHI (Realist English). Imports of Russian coal to India jumped in March to the highest in more than two years, according to the analytical company Kpler.
Coal imports from Russia were at 1.04 million tonnes, the highest level since January 2020, Kpler’s Matthew Boyle, lead dry bulk analyst, told CNBC in an email. As much as two-thirds of March’s volume came from Russia’s Far East ports,
“Markets suspect that India and China may boost coal imports from Russia, offsetting some of the impact of a formalised EU ban on Russian coal imports,” Vivek Dhar, director of mining and energy commodities research at the Commonwealth Bank of Australia, said in a note last week.
On April 7, the European Union agreed on the fifth package of sanctions against Russia, which includes a ban on coal imports. Some time later, New Delhi announced plans to double the purchase of coal from the Russian Federation.
“The EU ban on Russian coal imports comes at a time when the international coal market is already very tight, with correspondingly high prices,” said Rystad Energy in a note. “A surge in coal demand in Asia, as countries try to minimize imports of expensive natural gas, has sent coal prices soaring in the past year.”
The main benchmark for coal imported into Europe — the API 2 — saw May prices surge to $300 per tonne last Tuesday, compared to $70 per tonne a year ago, according to Rystad Energy.
Coal accounts for around 70% of India’s electricity generation, according to the International Energy Agency’s 2021 India energy outlook report. The country is the world’s second-largest consumer and importer of coal, with China being the first.
Russia is the sixth largest coal producer on the planet. According to the Energy Information Administration of the US Department of Energy, in 2020, 54% of the country’s coal exports were to Asia, and about 31% were to European member countries of the Organization for Economic Cooperation and Development (OECD).