Two trade sources and Reuters data reviewed show that India has increased its purchases of Russian coal in recent weeks, despite global sanctions against Moscow.
The European Union, facing severe sanctions over its invasion of Ukraine, was warned by Russia in April against sweeping sanctions on coal, stating the penalties would cause the fuel to be diverted to other markets.
While calling for an end to the violence in Ukraine, India did not condemn Russia, with which it has longstanding political and security ties. As part of an effort to diversify its supplies, New Delhi argues a sudden halt to its purchases of Russian goods would cause world prices to jack up and harm its consumers. Despite no ban on Russian energy imports, U.S. officials do not want to see a “rapid acceleration”.
However, Indian buyers are buying large quantities of Russian coal despite high freight costs despite European importers shunning trade with Moscow. Reuters reviewed unpublished Indian government data that showed the country’s purchases of coal and related products climbed more than six-fold from the same period a year earlier to $331.17 million. Similar to western countries, Indian refiners have snapped up cheap Russian oil. In the 20 days through Wednesday, India’s oil trade with Russia increased by more than 31-fold to $2.22 billion. Saturday’s request for comment was not immediately responded to by the trade ministry of India.
Russia’s traders have been accommodating with payment routes and are accepting Indian rupees and United Arab Emirates dirhams,” a source said. This trend of increased Russian coal purchases will continue as the discounts are attractive, the sources said. COAL BUYING TO CONTINUE Offshore units of Russian coal traders such as Suek AG, KTK and Cyprus-based Carbo One are offering discounts of 25% to 30%, which triggered bulk purchases of Russian thermal coal by utilities and cement makers. According to a second source, Suek’s unit in Singapore also accepts payments in dollars. Neither Suek nor KTK responded immediately to inquiries.
Carbo One couldn’t be reached at press time. The EU ban has barred new coal contracts and will force existing contracts to end by mid-August. Reuters calculates that India bought $16.55 million worth of coal a day in the three weeks through Wednesday, more than double what it bought in the three months after Russia’s Feb. 24 invasion. It spent more than triple the $31.16 million it spent in the three months to May 26 on oil purchases, averaging $110.86 million a day over the 20-day period. Ship tracking data from Refinitiv Eikon show that bulk purchases of Russian coal by India are set to continue, with June imports expected to be the highest in at least seven and a half years. An Indian coal trader has compiled shipping data showing that bulk shipments of thermal coal from Russia began reaching India in the third week of May, mainly being ordered by cement and steel firms and traders.