China took steps to avoid Russian oil for political reasons, while declaring they have never approved of sanctions to resolve conflicts. Instead, Russia’s abundant coal inventory created an opportunity for India to boost theirs for manufacturing construction steel.
Could not come at a better time
India was scooping up Russian oil at heavily discounted rates. Shortly after, its coal imports from Russia jumped in March 2022 to highs not seen in more than 2 years, according to data from Kpler, a commodity intelligence firm. Coal imports from Russia were at 1.04 million tonnes, the highest since January 2020, according to Kpler’s Matthew Boyle, lead dry bulk analyst. As much as two-thirds of March’s volume came from Russia’s Far East ports, likely in late February.
Vivek Dhar, Director of Mining and Energy Commodities Research at the Commonwealth Bank of Australia said: “Markets suspect that India and China may boost coal imports from Russia, offsetting some of the impact of a formalised European Union (EU) ban on Russian coal imports.” India plans to double imports of Russian coking coal, used to make steel.
In India’s defence, Steel Minister Ramchandra Prasad Singh revealed in late March 2022 that India is leaning towards importing more coal from Russia – in fact doubling the volume. “We are moving in the direction of importing coking coal from Russia,” he reportedly said. India ramped up Russian coal imports at an irresistible discount. Apart from allocating a percentile for electricity use, the remaining is for infrastructure construction and other transport sectors except for shipping, as per India Brand Equity Foundation’s (IBEF) steel industry report dated November 2021.
Coal accounts for around 70 per cent of India’s electricity generation, according to the International Energy Agency’s 2021 India energy outlook report. The country is the world’s second-largest consumer and coal importer, with China taking pole position. With it off the importer list, the industry can look forward to high coal volume entering India.