Buyers are taking advantage of hefty discounts due to sanctions
Russia has become India’s third largest coal supplier thanks to big discounts offered for the commodity, overtaking other major producers, Reuters reported on Thursday.
India's coal imports from Russia jumped to just over 2 million tons in July, the agency said, citing data compiled by price reporting agency CoalMint, which constitutes a 10% month-on-month increase.
Russia was previously the sixth-largest coal supplier to India, with Indonesia, South Africa, Australia, the US, alternately featuring in the top five, Reuters says.
“Following the sanctions imposed by European countries, Russia has been struggling to sell its coal and is offering hefty discounts. This comes as a boon for the Indian buyers as they increase procurement of Russian coal at a time when there is shortage of domestic coal in the country," CoalMint said in a release published earlier this week.
Most of the coal arriving 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, the volumes of Russian thermal coal, which is used to generate power, increased dramatically, rising by 55% month-on-month and 500% year-on-year.
Imports of coking coal, which is used mainly in steelmaking, were up by 75% month-on-month. Due to Russia’s physical proximity to India, its coking coal yields lower-per-ton steel production cost compared to supplies from countries such as Australia and the United States, CoalMint explains.
India's central bank last month introduced a new mechanism for international trade settlements in rupees, aiming to promote 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 jumped nearly five-fold to over $15 billion since February.
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