According to figures from research consultancies, India’s coal imports from Russia in March could be the biggest in more than two years, as Indian purchasers continue to acquire the fuel from a market that is becoming increasingly isolated due to sanctions.
According to data from consultant Kpler, ships carrying at least 1.06 million tonnes of coking coal, which is largely used for steelmaking, and thermal coal, which is primarily used for electricity production, are expected to arrive at Indian ports in March, the highest since January 2020.
Russia is sixth largest supplier of coal for India
Russia, which is usually India’s sixth-largest supplier of coking and thermal coal, could start offering more competitive prices to Chinese and Indian buyers as European and other customers avoid Russia due to sanctions, traders said, adding that trade could also benefit from a rouble-rupee trading arrangement.
According to Indian consultancy Coalmint, some 870,000 tonnes of Russian coal have been transported or are anticipated to be delivered to Indian coasts by March 20, the largest since April 2020.
According to Aditi Tiwari, coal market head at Coalmint, the number would be higher if additional coal had been loaded at Russian ports since mid-February, as Russian boats normally take around a month to deliver to India.
“Following the SWIFT cutoff and Russian sanctions, Indian customers have taken a backseat. They’re exploring for alternatives in Australia and the United States.” The SWIFT secure messaging system, which permits cross-border transfers, has been cut off for a number of Russian institutions.
According to Refinitiv vessel tracking data and an industry source, at least three coal-carrying tankers sailed to India from Russian ports after Russia commenced its invasion of Ukraine on February 24. “Indian buyers are still getting coal from Russia into the market here,” one industry insider said, “but it’s becoming increasingly difficult because banks are refusing to accept letters of credit.”
“Bankable long-term clients are being given over coal on a trust basis,” the source claimed, adding that “relatively new customers are unable to acquire coal due to financial concerns.”
Importing from Russia would be impossible unless there was a “rupee-rouble” exchange, according to V.R. Sharma, general director of Jindal Steel and Power Ltd. (JSPL). India is looking into ways to establish a rupee payment channel with Russia in order to mitigate the impact of Western sanctions on Russia on New Delhi.
“If the rupee-rouble trade is permitted, we would be able to acquire coal from Russia at more inexpensive and lower costs,” Mr. Sharma told Reuters. In March, JSPL joined Tata Steel, Kalyani Steels, and JSW Steel as importers from Russia. JSW and Kalyani Steel declined to comment, while Tata Steel and Kalyani Steel did not respond to Reuters’ requests for comment.
Sibuglemet, one of Russia’s largest exporters, claimed the company and its competitors are continuing to sell coal to India, but “some challenges are emerging,” according to a trader. “If they impose tight payment limitations tomorrow, trading will be conducted through buyers in other nations,” he predicted.