Source : https://www.argusmedia.com/en/news/2150054-asian-deliveries-boost-russias-september-coal-exports
Russian coal exports to the Asian markets were strong last month, while a decline in shipments to the Atlantic basin slowed owing to rising cif Amsterdam-Rotterdam-Antwerp (ARA) prices and Colombian supply disruption.
Coal railings to Russian ports rose by 9.6pc on the year to 14.9mn t last month and were flat against August, rail data show.
Thermal coal exports were also flat last month compared with August and are again strong in October, shipping data show.
Russian exports rebounded in the third quarter after a weak first six months of the year, when trade was hit by the Covid-19 pandemic.
Railings to Russian far eastern ports were buoyed by strong Asian demand in September and totalled 8mn t, up by 1.2mn t on the year. Deliveries to Asia were the key driver, with September exports to this market rising by 22.9pc on the year to at least 8mn t, based on shipping data. The actual figure is likely to be higher as the final destinations of several September-loading vessels were unclear at the time of writing.
Flows to South Korea and Taiwan rose by 68.5pc and 39.7pc on the year, respectively, to 1.9mn t and 1.3mn t. And shipments to China rose by 10.1pc to 2.3mn t to represent Russia's largest export market, but exports to Japan slipped by 10.9pc to 861,000t.
The outlook for Russian exports to China may be helped by Beijing's apparent decision to ban the import of Australian coal. But much will depend on the extent to which import quotas are available for the remainder of the year and how the system resets for 2021.
South Korean coal demand may also be trimmed by greater competition from gas and the resumption of nuclear activities following typhoon-related stoppages.
Changing price spreads
But Russian coal has been highly competitive against other origins in South Korea recently, which could insulate Russian suppliers from some of the overall weakness in northeast Asian demand.
The implied tax-inclusive South Korean generation cost for a 38pc-efficient plant fed by NAR 6,000 kcal/kg Russian coal was $37.91/MWh in September, according to Argus analysis, compared with $38.27/MWh for Australian coal and nearly $40/MWh for GAR 4,200 kcal/kg Indonesian coal.
And Russian coal's cost advantage has widened this month, as implied generation costs for Australian and Indonesian coal have advanced by $2.62/MWh and $1.30/MWh compared with only a $0.98/MWh increase in costs based on Russian coal.
Coal railings to southern ports in the Black Sea increased by 358,000t on the year in September to 1.7mn t. This was primarily owing to bumper railings to Taman, which hit a record high of 800,000t.
Railings to northwest ports, which primarily supply the European market, posted their 12th consecutive year-on-year fall. Railings dropped by 638,000t on the year and 250,000t on the month to 4.9mn t.
But the pace of decline in shipments to Europe has decelerated recently, as cif ARA prices have risen. The opening of a new bridge connecting Murmansk port with the wider Russian coal network at the start of October should also smooth the transit of coal to the European market.
Supply disruptions in Colombia mean that Russian suppliers are well placed to capitalise on any tentative demand recovery in northwest Europe in the coming months, spurred by a greater reversal in coal-to-gas fuel switching or any cold spell.
The delivered cost of NAR 6,000 kcal/kg Russian coal from Murmansk to ARA was $57.38/t on 12 October, $8.57/t below the equivalent Colombia-delivered price. This spread has reversed since October last year, when Colombian coal held an average $2.79/t cost advantage, and blown out from an average of $4.67/t in July-September this year.
Russia's cumulative January-September coal railings were 125mn t, down from 128.3mn t in January-September last year.
By Alex Thackrah
Europe-delivered coal prices $/t
YoY change in Russian coal railings mn t