- India has significantly increased its coal purchases in Russia after Moscow unleashed a war in Ukraine.
- In the near future, however, this dynamics will slow down, at least for a while. There are several factors supporting this.
- The problem is, among other things, the availability of ships for the transport of coal.
The availability of coal transport vessels will be limited in the near future due to increased purchases of raw materials by various countries in this period. It is also associated with crowds on shipping routes around the straits connecting the Baltic Sea with the North Sea. Europe is trying to supply LNG, diesel and oil by sea after shipping from Russia has stopped. Meanwhile, a large part of the supplies to India were sent from the port of Ust-Luga.
But the decline in sales to India is also influenced by sanctions, namely the refusal of Western companies to insure the transport of Russian coal loads. Coal companies from Russia, together with the Russian Central Bank and the Russian government, are trying to solve the issue of insuring transports. – This problem is overcome. We have to give our companies some time, said Sergei Macalnikov, Deputy Minister of Energy, at the end of August.
The EU ban on imports of Russian coal has been in force since August 10. The sanctions not only introduce an embargo on Russian coal in the EU, but also prevent EU operators from providing services such as financing and insurance of Russian coal loads directed to third countries.
CoalMint, a company that monitors the Indian coal and coke market, estimates that, given all these restrictions, imports of Russian coal to India will be limited in the coming months. Nevertheless, in the long term, Russia strongly focuses on developing trade cooperation with India. This is a direction that may take over some of the supplies, filling to some extent the gap left by the lost European market.
And there is something to develop. So far, the share of Russian coal in imports to India was only 4%. Meanwhile, consulting firm Wood Mackenzie estimates that total coal imports to India will increase by 7% this year. yoy, up to 158 million tons, and in 2023 by another 3%, to 163 million tons. Russia will be anxious to increase its share in this market.
Indian imports are driven primarily by the soaring demand for electricity. Its consumption is growing this year at the fastest pace in at least four decades.
India itself is also interested in increasing imports from Russia, it is financially advantageous for them due to the rebates when purchasing Russian raw material compared to the prices of raw materials from other directions.-
Coal imports to India increased from 4.83 million tons to 9.35 million tons in the six months following Russia’s invasion of Ukraine. But India is willing to buy more than just coal. They also buy Russian oil – its import in April-August increased to 757 thousand. barrels per day from 20 thousand. a year before. The import of fertilizers is also growing. In the April-July period, their sales increased in value to over $ 1 billion. from $ 150 million a year before.
The risk of an energy crisis is growing