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'Russia Eyeing Asian Markets For Its Coal Exports'
Deepak Kannan of S&P Global Commodity Insights shares how Russia is looking to tap Asian markets for its coal exports as Europe moved to other markets after Russia-Ukraine war
Photo Credit : Photo by Dominik Vanyi on Unsplash
Russia is now looking at expanding its coal exports to the Asian market, said Deepak Kannan, Global Head of Coal Pricing, S&P Global Commodity Insights, on Monday as Europe taps other markets for its coal exports.
Kannan explained that the coal trade flows have changed drastically since the war between Russia and Ukraine broke out last year.
“As Europe stopped coal imports from Russia, it was cut short of fuel and had no gas supplies. There was a shift in demand for Asian coal, and Europe started scrambling for cargoes from wherever they could get. They tapped Colombia, South Africa, Australia and even Indonesia,” said Kannan.
Shift In European Demand
With this shift in European demand, Kannan said that Russia did not have a home for its coal exports and started offering cargoes at a discount to whoever was buying.
Among the countries that are now buying Russian coal are China, India, and South Korea.
“Two years ago, Russian coal imports by India were around 4 million tonnes, today it is around 17-18 million tonnes. That is a big leap you see here for Russian coal,” Kannan stated.
Other Asian Markets
Kannan also delved into other markets in Asia, such as Vietnam, which today is buying nearly two-three million tons of coal per month compared to one million tonnes of coal per annum a few years back.
Citing the lack of indigenous production in Southeast Asian and Northeast Asian markets, Kannan said they all have to depend on imported coal. Russia is eyeing these regions for its exports.
“These two regions account for nearly 40 per cent of the global seaborne trade. So that goes on to show the huge market in this region,” Kannan said.
Coal Is Here To Stay
Talking about how renewables will fare against coal, especially in India, Kannan said that over the next few years, while renewables will get added to the energy mix but at the same time the, coal-fired power plants will also get added.
”Renewables are getting added at 10-15 per cent, but in absolute volume terms, it is still very nascent. It is not comparable to coal, given its share in the energy mix, and moving away from that will take a Herculean task. Renewable’s share may eat into coal’s share in terms of percentage, but coal will continue in terms of absolute volume,” Kannan stated.
As countries worldwide endeavour to switch to clean energy to meet their climate goals, financing institutions have stopped financing coal-based projects.
Kannan reckoned due to this, there is little capacity expansion that they are seeing. However, things are different for countries like India and China.
”…because we are talking about big countries like China and India where we have a growing population and economy, the coal-fired power plants are being added here. At the same time, their domestic production is also increasing,” Kannan said.
India’s Coal Stock Situation This Summer
With the Indian Meteorological Department (IMD) predicting a hot and oppressive summer and temperatures soaring above 40°C in various parts of the country in April, the government expects the power demand to hit 230 gigawatts.
Power demand had touched 212 GW last summer in India, and various parts of the country saw power outages as power plants scrambled for coal supplies.
”After the power crisis, we saw last year, this has changed quite a bit. The government is ensuring that all the power plants are well stocked. They have around 23-24 days of coal stocks which is pretty high compared to last year, where we were even left with just one day’s of stock,” Kannan said.
India has been ramping up coal production by almost 10 per cent every year, and Coal India plans to produce 1 billion tons of coal by 2023-24.
Kannan reckoned that producing coal is not an issue; it can always be ramped up; it is the logistics of coal supply to power plants which becomes the key and needs to be improved.