Buyers benefit from significant discounts due to sanctions
Russia has become India’s third-largest coal supplier thanks to deep discounts being offered for the feedstock, catching up with other major producers, Reuters reported Thursday.
India’s coal imports from Russia rose to just over 2 million tons in July, the agency said, citing data collected by price reporting agency CoalMint, representing a 10% increase on a monthly basis.
Russia used to be India’s sixth largest coal supplier, with Indonesia, South Africa, Australia and the US alternately in the top five, Reuters said.
“After the sanctions imposed by European countries, Russia is struggling to sell its coal and is offering significant discounts. This is a boon for Indian buyers as they are buying more Russian coal at a time when there is a shortage of coal. domestic coal in the country,” CoalMint said in a release published earlier this week.
Most of the coal coming from Russia in July was thermal coal (1.4 million tons) and coking coal (0.29 million tons). Historically, India imported more coking coal from Russia. But in July, CoalMint notes, volumes of Russian thermal coal used to generate energy rose dramatically, by 55% month-on-month and 500% year-on-year.
Imports of coking coal, which is mainly used for steel production, increased by 75% month-on-month. Because of Russia’s physical proximity to India, its coking coal provides a lower production cost per tonne of steel compared to deliveries from countries such as Australia and the United States, explains CoalMint.
India’s central bank last month introduced a new mechanism for international trade settlements in rupees, with the aim of facilitating trade with Russia after Moscow was cut off from major currencies such as the dollar and the euro due to sanctions over the conflict in Ukraine. According to Reuters, India’s imports from Russia have nearly quadrupled since February to more than $15 billion.
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