India’s hunger for coal is growing. After buying Russian oil at a discount, the Asian giant is heading for Russian coal. Indian coal imports from Russia jumped in March to peaks unseen for more than two years, according to data from leading data provider and commodity market analyst Kpler, quoted by CNBC. Last month, Russia’s coal imports to India amounted to 1.04 million tonnes, the highest level since January 2020, said Matthew Boyle, a leading analyst at Kappler.
“India and China may increase coal imports from Russia, offsetting some of the impact on the country of the European Union’s (EU) formalized ban on Russian coal imports,” said Vivek Dhar, director of mining and energy research at Australia’s Commonwealth Bank of Australia. The previous week, India said it planned to double imports of Russian coal, which is used in steelmaking. Steel minister Ramchandra Prasad Singh told a conference in Delhi that the country is “moving in the direction” of importing coking coal from Russia.” He added that the country had imported 4.5m tonnes of coking coal from Russia but did not specify for how long.
“The EU’s ban on coal imports from Russia comes at a time when the international coal market is already very tight and at correspondingly high prices,” Rystad Energy said in an analysis. the largest independent energy consulting company in Norway. “Growing demand for coal in Asia, as a result of countries’ attempts to minimize imports of expensive natural gas, has led to rising solid fuel prices in the last year,” the analysis said.
The import of coal is not sudden and was planned even before Russian special operations in Ukraine. In July 2012, Frontier India had reported that India had declared its readiness to import 40 million tons of raw materials annually. Sibanthracite Group, the Russian producer of high-quality UHG anthracite and metallurgical coal, reported a 140% increase in supplies to India. Russia caters to only 2.5% of Indian coking coal imports.
According to the reference price index for coal imported in Northwest Europe – “API 2”, prices for May jumped to $ 300 per tonne last Tuesday, compared to $ 70 per tonne a year ago, according to the Norwegian company. India continues to rely on its relationship with Russia and its supply chain for ‘natural resources’ like oil and coal, despite warnings from the West, explained Samir N. Kapadia, chief operating officer of Vogel. However, Delhi is likely to benefit from the trade agreement it signed with Australia on April 2. According to him, customs duties on more than 85 per cent of Australian goods exported to India are to be abolished. However, this will have its limitations, as Australia will not have the necessary coal volumes to meet India’s growing needs, analysts said. Late last year, India was hit by coal shortages as demand for electricity rose. Coal is the primary source of about 70 per cent of India’s electricity production, according to a report by the International Energy Agency (IEA) on India’s energy prospects for 2021.
South Asia is the world’s second-largest consumer and importer of coal after China. Russia is the sixth-largest coal producer in the world. In 2020, 54 per cent of the country’s coal exports went to destinations in Asia, while about 31 per cent went to European member states of the Organization for Economic Co-operation and Development (OECD), according to the US Energy Information Agency (EIA). Ministry of Energy.