Traders Say Additional US Sanctions Likely to Hamstring Exports of Russian Coal to India

Traders who deal with coal from Russia believe the new sanctions the United States has imposed on Moscow will likely negatively influence imports of thermal coal from the Eastern European country to India. This, they say, is because the sanctions specifically mention Mechel and SUEK, leading Russian export companies.

Mechel is a top producer of specialty steels in Russia and is involved in the manufacture of rolled products from different types of steel. SUEK is a flagship transportation logistics company in Russia that operates its own railway infrastructure. The Russian defense ministry is one of the company’s biggest customers. SUEK is also involved in other trucking and transportation services.

Historically, Russia has been a minor exporter of thermal coal to India. However, shipments began to increase after the West imposed sanctions because of Moscow’s invasion of Ukraine. Since the beginning of the Ukraine war, India has also become the largest importer of seaborne crude from Russia. The latest sanctions also include Russia’s energy production, financial institutions and its payment system.

In a short interview, one thermal coal trader from India stated that with the latest sanctions, they didn’t expect any of the major Indian companies to purchase Russian cargoes. Another Indian trader added that while coal shipments wouldn’t halt completely, people wouldn’t be as willing to bring in Russian imports. The trader added that the sanctions would also benefit other suppliers of coal, including South Africa, Australia and Indonesia.

Ship tracking data shows that in the last six months, the biggest importers of thermal coal from Russia were Arcelor Mittal Nippon Steel, Vedanta and JSW Group. The three companies are yet to make any comments on the potential impact from the latest sanctions.  Additionally, evidence of the sudden impact of the new U.S. sanctions cannot be established because thermal coal cargoes take more than two weeks to sail to India from Russia.

Bigmint, a consultancy company, stated that thermal coal supplied from Russia surpassed 10 million metric tons last year, representing a 19% increase.

The Indian Ministry of Trade also did not issue any comment on the impact of the sanctions on trade with the Eastern European country. The country’s oil ministry did, however, call attention to the country’s longstanding ties with Moscow in a note last week. In addition, the ministry discussed future plans for partnerships across different sectors with the country.

Since 2022, when Russia invaded Ukraine, New Delhi has repeatedly demanded the cessation of all hostilities while expanding trade with Moscow.

As those sanctions take effect, they could open business opportunities for players such as Peabody Energy Corporation (NYSE: BTU) that are domiciled in jurisdictions which aren’t antagonistic to the U.S. and the West.

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