Russian coal exports fall 7.0% as EU sanctions bite, tonne miles up

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 of almost 30% in the last two and a half months. Since the coal sanctions were announced by the EU in April, average hauls for Russian coal exports have risen by nearly 50%, or around 1, 250 miles.

Graph of Russian seaborne coal exports

So far, capesizes have benefited the most from 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.

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.

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 handling Russian coal should continue to benefit from Chinese demand. 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%.




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