Huge discount in India’s purchase of Russian coal as traders
Russian coal purchases in India have accelerated in recent weeks despite global sanctions on Moscow, as traders offer discounts of up to 30%, according to data reviewed by two trade sources and Reuters.
Russia, facing severe Western sanctions over its invasion of Ukraine, warned the European Union in April against broad sanctions on coal, saying they would backfire as the fuel would be redirected to other markets.
India has refrained from condemning Russia, with which it has long-standing political and security ties, while calling for an end to the violence in Ukraine. New Delhi defends its purchases of Russian goods as part of an effort to diversify supply, arguing that the sudden halt would raise world prices and hurt its consumers.
US officials have told India that there are no restrictions on energy imports from Russia, but they do not want to see “rapid acceleration”.
Yet as European importers cease to trade with Moscow, Indian buyers are shunning vast quantities of Russian coal, despite higher freight costs.
Purchases of coal and related products rose more than six-fold to $331.17 million in the 20 days to Wednesday from the same period a year ago, according to unpublished Indian government data reviewed by Reuters.
Similarly, Indian refiners have taken away cheap Russian oil dumped by Western countries. The value of India’s oil trade with Russia rose more than 31 times to $2.22 billion in the 20 days since Wednesday, the data showed.
India’s trade ministry did not immediately respond to a request for comment on Saturday.
“Russian merchants have been generous with payment routes and are accepting payments in Indian rupees and UAE dirhams,” a source said. “The discount is attractive, and this trend of higher Russian coal purchases will continue.”
Buying Coal to Continue
Offshore units of Russian coal traders such as Suec AG, KTK and Cyprus-based Carbo One in locations including Dubai and Singapore offered discounts of 25% to 30%, allowing the bulk of Russian thermal coal by traders supplying utilities and cement manufacturers. Purchase started. Sources said.
Another source said Singapore-based Suek’s unit is also accepting payments in dollars.
Suek and KTK did not immediately respond to requests for comment. Reuters could not immediately reach Carbo One.
The EU sanctions put a halt to new coal contracts and will force member states to terminate existing ones by mid-August.
India bought Russian coal worth an average of $16.55 million in the three weeks from Wednesday, more than double the $7.71 million it bought in the three months following Russia’s February 24 invasion, according to a Reuters calculation.
Oil purchases averaged $110.86 million per day over a 20-day period, more than triple the $31.16 million spent in the three months ended May 26.
Indian bulk purchases of Russian coal are set to continue, with June imports expected to be the highest in at least seven-and-a-half years, Refinitiv Eikon ship tracking data showed.
Bulk shipments of Russian thermal coal began arriving in India in the third week of May, with orders mainly from cement and steel firms and traders, according to shipping data compiled by an Indian coal trader.
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