India’s Russian coal imports in March could be the highest in over two years

Russia may start offering more competitive prices to Chinese and Indian buyers as European and other customers reject Russia over the sanctions

Russia may start offering more competitive prices to Chinese and Indian buyers as European and other customers reject Russia over the sanctions

India’s coal imports from Russia in March could be the highest in more than two years, data from research consultancy firms showed, as Indian buyers continue to buy the fuel from a market now increasingly isolated by sanctions.

Ships carrying at least 1.06 million tons of coking coal, which is mainly used for steelmaking, and thermal coal, which is mainly used for power generation, are scheduled to deliver the fuel to Indian ports in March, the highest since January 2020, according to data from consultancy Kpler showed.

Russia, normally India’s sixth-biggest supplier of coking and thermal coal, could start offering more competitive prices to Chinese and Indian buyers as European and other customers reject Russia over sanctions, traders said, adding that trade could also be boosted by a ruble – Rupee Trade Agreement.

About 870,000 tons of Russian coal have already been delivered or are expected to be delivered to the Indian coast by March 20, the highest since April 2020, Indian consultancy Coalmint says.

The figure would be higher if more coal were loaded at Russian ports since mid-February, as it usually takes about a month for Russian ships to deliver to India, said Aditi Tiwari, coal market manager at Coalmint.

“Indian buyers have taken a back seat following the SWIFT ban and sanctions against Russia. They are looking for alternatives from Australia and the US.”

A number of Russian banks have been cut off from SWIFT, a secure messaging system that facilitates cross-border payments.

But at least three ships carrying coal sailed from Russian ports to India after Russia launched its invasion of Ukraine on Feb. 24, according to ship-tracking data from Refinitiv and an industry source.

“Indian buyers are still bringing coal from Russia to the market here but are finding it increasingly difficult because banks are unwilling to open letters of credit,” the industry source said.

“Long-term bankable customers will be handed coal on a trust basis, while relatively new customers cannot source coal due to funding issues,” the source said.

VR Sharma, Managing Director of Jindal Steel and Power Ltd. (JSPL) said importing from Russia would be difficult unless there was a “rupee-ruble” trade.

India is exploring ways to set up a rupee payment mechanism with Russia to soften the blow of Western sanctions imposed on Russia on New Delhi.

“If the rupee-ruble trade is approved, we can get coal from Russia at affordable and cheaper prices,” Mr Sharma told Reuters.

JSPL is among the importers from Russia in March along with Tata Steel, Kalyani Steels and JSW Steel. JSW declined to comment, while Kalyani and Tata Steel did not respond to Reuters requests for comment.

A trader at Sibuglemet, one of Russia’s largest exporters, said the company and its competitors continue to ship coal to India, but said “some problems are emerging”.

“If they introduced strict payment controls tomorrow, trade would be organized through buyers in other countries,” he said.

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