Pending the European embargo on Russian oil in retaliation for the war waged by Moscow in Ukraine, it will force Russian producers to find other outlets for its exports, particularly in Asia, for coal – which will only come into effect in August , a region that concentrates most of the international coal trade.
“India is looking for Russian coal because it wants to take advantage of significant discounts on the prices of Australian and South African coal of equal quality, especially as stocks in national power plants are dwindling.”say Suyash Pande and Pritish Raj, analysts at S&P Global.
Barely more than 1% of imports
According to data from Kpler, a data intelligence firm specializing in commodity markets, Russian coal imports already reached 1.04 million tons in March, the highest level since January 2020.
In 2021 they amounted to 1.76 million tons, or just over 1% of the 173.32 million tons of coal purchased on the international market. India was not even included in the list of the main buyers of Russian coal, dominated by the European Union (31%), China (17%), South Korea (12%) and Japan (10%).
But that could change. On the oil side, India is tempted by the discount on Russian coal, despite US threats against it.
“India bought a shipment of Russian thermal coal for $160-165 per tonne for delivery in April, with freight costs of $35-36 per tonne, which is $60-65 less than Australia’s equivalent grade”S&P Global analysts say, recalling that Russian coal was already offering its coal for $10 less than a tonne from Australia late last year.
This attractiveness is all the more important as prices have risen. The European but also Japanese embargo on Russia, the world’s third largest exporter (18%), came on top of the decision by Indonesia, the world’s largest exporter (41%), to reduce its exports since January to support its local market. to supply. putting global demand under pressure on Australia (20%), South Africa (8%) and Colombia (5%).
Prices up 117% since January
According to the Trading Economics reference, which pools Australian and US data, the price of thermal coal has risen 117% since the beginning of the year, moving around $328 per tonne on Tuesday, after falling $435 on March 9. have reached. †
With Russian coal, New Delhi can both reduce the cost of its energy bill, which contributes to inflation, which reached 6.95% over a year in March, and supply its power plants, whose inventories stood at 23.17 million tons by mid-April. . , barely equal to 8 days of consumption. A tense situation that points to electricity shortages in many states of the country. Like China, India also plans to boost local production to become less dependent on imports. Indeed, the country is the world’s second largest coal importer, with a share of 15% in 2021, behind China (23%) and ahead of Japan (14%), according to the International Energy Agency (IEA).
For example, local production in China increased by 15% year-on-year to 396 million tons in March. Beijing has also confirmed that an additional 300 million tons of coal mining capacity has been added this year.
For its part, the American Energy Information Agency (EIA) forecasts a 4% increase from 2021 in United States coal exports, which should reach 89 million tons. The agency explains this trend by the prices that will remain high and of course by the interruption of the supply from Russia.
This return to the use of coal, which started at the end of last year with the energy crisis and the rise in natural gas prices in Europe and Asia, goes against the will of the countries to reduce their employment to combat global warming , as reaffirmed by COP26 in Glasgow. India, for its part, has pledged to phase out coal imports by 2030.
“Total coal-fired electricity rose 9% to an all-time high in 2021, more than recovering from a 4% drop in 2020 when Covid hit”notes the Global Energy Monitor in its annual report published Tuesday.
India accounts for 14% of global coal projects
Thereby, “Only 180 gigawatts (GW) of coal-fired generation capacity in the OECD, just over a third of the total in the OECD, is slated for shutdown by 2030 in line with the commitments of the Paris Agreement”notes this study, which mobilized several associations. Outside the OECD, “less than 10% of capacity is scheduled to close before 2050, with 2050 being the year we need to completely eliminate coal to meet a scenario of limiting temperature change to 1.5 degrees Celsius”regrets the Global Energy Monitor.
Today, more than 2,400 coal-fired power stations are operational in 79 countries with a total production capacity of approximately 2,100 GW. This is expected to increase by 457 GW as a result of new coal-fired power plant projects. The San Francisco-based research firm counts that: “34 countries still have active projects” even though it is “decrease of 41 countries in January 2021”†
Above all, these projects are concentrated in Asia. In 2021, more than half (56%) of the 45 GW production units commissioned were located in China (25.2 GW), 14% in India and 11% in Indonesia, Vietnam and Cambodia.
In India, more specifically, “Despite signs of a coal phase-out, more than 23.8 GW of planned capacity remains, of which more than half (12.6 GW or 52%) is licensed; 31.3 GW is under construction and any small factories have a fixed date for decommissioning”, notes the Global Energy Monitor. A prospect that should make the country one of the main buyers of Russian coal.
ZOOM- India has bought twice as much Russian oil since the war in Ukraine
l’India has bought almost twice as much Russian oil since the invasion of Ukraine on February 24 as in all of 2021, taking advantage of its attractive price and the reluctance of certain powers to trade with Moscow. Since the war in Ukraine began, Indian refineries have ordered at least 40 million barrels from Russia, a figure more than double the 16 million barrels imported in 2021, Reuters calculations show. l’India, the world’s third-largest crude consumer, imports 85% of its oil needs, equivalent to five million barrels per day. Refineries are benefiting from lower Russian oil prices, while those of Brent or some producers such as Saudi Arabia have risen, sources said. India’s oil minister, Hardeep Singh Puri, defended Russia’s imports, saying on Friday they make up a small fraction of the country’s total needs. Washington said it had no objection to New Delhi buying Russian oil at below-market prices, but warned of a surge in imports that could undermine the effect of sanctions against Moscow. Analysts have indicated that Russian oil imports by theIndia could decline as the effective application of Western sanctions from mid-May and late June could affect logistics.