Russia Set to Firm Its Position in Global Coal Market: Report

Russia is set to expand in the global coal market as it plans to increase shipments of the fuel and the cost advantages appear increasingly stacked in its favor, Reuters writes.

Already the third-largest supplier to the seaborne market, behind Indonesia and Australia, Russia is moving to take advantage of its central geographic position to boost exports to both the Atlantic and Pacific basins, Clyde Russell writes in an opinion published by the news agency.

At this week’s World Coal Leaders conference in Lisbon, Russia provided a group of delegates upbeat about gaining market share in both Europe and the Far East from established competitors.

“Taking Europe first, Russian exporters can ship into the Baltic Sea, the Black Sea and by rail into Europe, allowing cost-effective access to northwest and Mediterranean market,” Russell writes, adding that although Europe is a shrinking market for the thermal coal used in power plants, Russia is positioning itself as the lowest-cost supplier.

Russian coal can be mined for about $7 to $11 a ton, with rail costs to the Baltic of around $24 a ton. Add in around $10 for port charges and the Russians can supply thermal coal-free on board at around $41 to $45 a ton.

“The lower sea freight charges compared to competitors from Colombia, the United States and South Africa means Russian coal can generally undercut their cargoes. The considerably shorter sea distances it has to travel are likely to become an even greater advantage if new fuel regulations, known as IMO 2020 and scheduled to come into effect in January, increase sea freight costs,” the article says.

Europe’s seaborne imports from Russia were 31.9 million tons in the first nine months of the year, down slightly from 32.6 million for the same period last year, import data compiled by Refinitiv shows.

But the small drop for Russia must be viewed against sharp declines among its competitors, with imports from the United States dropping to 21.5 million tons from 23.9 million, and those from Colombia at 20.9 million tons from 29.8 million, Russell writes.