India To Increase Coking Coal Imports From Russia?

To take advantage of cheaper prices and diversify its imports, India intends to increase the volume of Russian coking coal (also known as metallurgical coal). The Indian steel industry is eager to benefit from the cheaper costs and quicker supply of Russian coking coal. This action was taken after Australia, India’s largest metallurgical coal supplier, cut its annual supplies to India due to increased coal imports in India from the United States and Russia. Australia’s share decreased from 75 to 80% to 54% during the first 11 months of the preceding fiscal year, according to government figures.

Russia Emerges As A Major Supplier

Russian metallurgical coal prices were 15%-30% cheaper than Australian metallurgical coal supplies, which averaged around $350/ton, making Russian supplies a more lucrative option. Moscow has emerged as India’s fourth-largest coking coal supplier by exporting 3.9 million tons between April 2022-February 2023, more than double the amount from a year earlier. Coal analysts predict that Russia may emerge as India’s second-largest supplier this year due to India’s strategic focus on increasing energy sourcing from Russia.

Competitive Prices And Smooth Trade Flow

Recent Russian metallurgical coal prices (which averaged around $350/ton) were 15%-30% less expensive than the Australian metallurgical coal supply. In June 2023, Russian supplies are anticipated to stay less expensive. Coking coal exports to India would increase due to favorable prices, as well as easy trade flow between Moscow and New Delhi, made possible by various Russian trading enterprises.

Impact on India and Its Relationship With Russia

India’s shift towards Russian metallurgical coal is expected to have a positive impact on India’s economy and its relationship with Russia. By diversifying imports, India will reduce its reliance on a single supplier and ensure steady supplies of metallurgical coal at lower prices, supporting India’s steelmaking industry’s growth. The presence of several Russian trading companies in India will help coordinate transportation, logistics, and financing for metallurgical coal shipments, making trade flows between the two countries more efficient.

OFB’s Insight

Russia has the potential to become a critical supplier of coking coal to India, providing opportunities for closer economic ties between the two nations. Overall, India’s move to diversify its coking coal imports in India and increase energy sourcing from Russia will have a positive impact on India’s steelmaking industry and its economic relations with Russia.

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