Europe's Biggest Steel Maker, Indian Companies Ramp Up Imports of Discounted Russian Coal
13:58 GMT 12.05.2022 (Updated: 17:14 GMT 12.04.2023)
While Western allies have announced a ban on Russian coal, China last month doubled its month-on-month met coal imports from Russia. Steep discounts afforded by Russian coal exporters to buyers is one of the main reasons why coal importers in Asia, including India, are opting for Russian coal.
The Indian affiliate of Luxembourg-headquartered ArcelorMittal SA ramped up its coal imports from Russia in May, an industry source told Sputnik.
In India, ArcellorMittal SA and Japanese company Nippon Steel have a joint venture AM/NS geared towards producing around 300 grades of steel.
The source informed that several big Indian companies, including those backed by billionaire businessman Gautam Adani, have also been sourcing coal from Russia, in spite of disruptions created by cutting Russian banks from the SWIFT payment system under targeted sanctions against Moscow by the US, EU, and other Western allies.
JSW Steel India, another leading steel producer, is also sourcing Russian coal "freely", the source added.
The source said that shipments of metallurgical coal, which is used in steelmaking operations, has made its way into Hazira Port on India’s west coast. As per Indian government rules, metallurgical coal can be imported under a "General Open License
", as per the individual requirements of Indian companies.
“One of the draws of Russian coal is that it is selling cheaper by $35 a tonne on the international market than other coal originating from other producers”, the source explained.
The international price of coal on key benchmarks reached an all-time high of $400 per tonne in March, before starting to cool off. However, even today, the international coal prices are higher than at the same time in the previous fiscal.
The development comes as stocks of met coal imported through Indian ports fell to a low of 3.7 million tonnes in March 2022, as compared to 5.7 million tonnes in March 2021.
The source added that Russian coal imports
into India could rise in the coming months as the South Asian nation faces a surge in demand due to the ongoing post-COVID recovery phase as well as scorching summer ahead, which is set to drive demand for steam or thermal coal, another variant.
In March, ArcellorMittal SA announced that it had achieved “independence” from Russian coal in its supply chain, consequent to the conflict in Ukraine.
“We are independent now”, ArcelorMittal’s Chief Executive Officer (CEO) Geert Van Poelvoorde was quoted as saying by Bloomberg
“For the third quarter, we need to buy a bit more from non-Russia. But this is not a big issue”, he added.
Both the EU and Japan last month announced bans on the import of Russian coal under coordinated sanctions against Moscow over its special military operation in Ukraine.
Coal prices hit a record high this February after the Ukraine conflict began, largely on account of supply chain disruptions caused due to the unavailability of coal from Russia, which ranks among the biggest coal exporters globally.