As a part of European Union sanctions against Russia, the block banned coal imports from Russia starting 10 August. About two months have passed and Russia has struggled to redirect its coal exports, with export volumes down 7.0% y/y in this period and down 5.0% year to date.
Despite the drop in volumes, tonne mile demand has seen an increase by almost 30% in the last two and a half months. Since the coal sanctions were announced by the EU in April, average haul for Russian coal exports have risen by nearly 50%, or around 1,250 miles.
“So far, capesizes have seen the biggest increase in tonne miles following the ban, largely due to India’s increased interest in discounted Russian coal. India’s government mandated an increase in coal imports over the summer, due to a surge in energy demand and low coal inventories. This resulted in a boost to tonne miles as capesizes laden with Russian coal from European ports sailed around Africa,” says Filipe Gouveia, Shipping Analyst at BIMCO.
“As import demand from India normalises, it is unclear whether the country will continue to buy Russian coal shipped from primarily Black Sea, Baltic and Arctic ports,” Gouveia says.
So far in 2022, China remains the largest buyer of Russian coal which has accounted for 22.6% of total Chinese coal imports. Even though Chinese coal import volumes dropped 25.7% so far this year, imports from Russia grew 3.5%, likely due to discounted prices.
“In the coming months, panamax and supramax ships should continue to see demand from China for Russian coal. However, the country’s ambitious coal mining target and increasing investments in renewable energy could cool the appetite for coal imports. In the first eight months, coal mining increased 13.8%, while electricity production from renewables rose 16.7%,” adds Gouveia.
Source: Hellenic Shipping News
