After oil, Russia has emerged as one of the largest import destination of coal for Indian corporates. Steel and cement, apart from power companies, are amongst the prime buyers of Russian coal. While steel mills are exploring PCI coal, cement-makers are ordering thermal coal from the country.
Trade sources say Russia is now amongst the top five importing destinations. And PCI coal imports are expected to be around 10–12 million tonne this year, an at least 15 per cent jump annually.
Historically, the European nation has been in the bottom half of the top 10 coal suppliers to India.
For July, thermal coal imports (from Russia) jumped upwards of 50 per cent when compared with June, while coking coal imports (for the same period) rose by over two-thirds, data by Coalmint, the coal vertical of Steelmint, showed.
According to officials of different Indian steel mills, usage has risen between 10 and 15 per cent, at least, since Russian coal — the ones used in pulverised coal injection systems (PCI) — was initially offered at “competitive rates” and discounts of 20–25 per cent. In August, there was some slowdown in order quantities because of weakened steel demand in domestic and international markets.
Settlements continue to be made in Yuan, Dirham, or other alternate currencies to the dollar and euro.
“We are ordering at least 75,000 tonnes of PCI on a monthly basis. So one shipment we received in August and another is on the way,” a steel mill owner told BusinessLine.
Another steel-maker, one of the largest in India, saw its share of pulverised coal imports from Russia jump to nearly 15 per cent, up from the previous 2–3 per cent.
PSU-steel maker SAIL too is said to be warming up to Russian coal imports.
Indian steel-mill owners say the price of Russian coal (PCI) is beneficial only when they get into “long term contracts”. Mills are now getting coal at 95 per cent of the indexed price, in the case of long-term contracts with suppliers.
“We have been buying coal from Russian sources, particularly certain metallurgical coals, which have been required in our operations. So, we continue to source similar kinds of coal because it’s not possible to overnight replace those. That having said, I think the general price of coal, if you have noticed, except for thermal, is generally on a softer trajectory, it’s correcting downwards,” Jayant Acharya, Deputy MD, JSW Steel, said during the Q1FY23 earnings conference call.
Cement makers order Russian coal
As coal costs shot up to ₹17,300 a tonne in Q1FY23, from ₹14,300 a tonne, cement makers in the country looked at cheaper sources for imports.
India’s largest cement-maker, Ultratech, has been among the buyers of Russian coal. The company’s Executive Director and CFO, Atul Daga, during the Q1FY23 earnings call, said that the company brought 157,000 tonnes of coal from Russia.
“And we keep one scouting for opportunities, so there is nothing. In fact, it was an opportunistic transaction. If something more surfaces, we will pick it up,” he said. The cement-maker’s coal mix for the quarter was primarily 52 per cent petcoke, 37 per cent imported coal, and 5 per cent domestic coal.
India Cements, too, was among the companies that imported Russian coal (during Q1FY23 – April to June), in a bid to “mitigate the increase in coal costs.”
According to N Srinivasan, VC & MD, India Cements has been procuring some quantities of Russian coal at a little lower price.
“On an average, Russian coal was cheaper by 20 paise per kcal (kilo calorie) than the coal that was available in the market,” said a senior official of India Cements.
Apart from Russian coal, the company’s fuel mix would comprise coal from Indonesia and the US. Overall, imported coal is around 65 per cent and 35 per cent is pet coke (most of which is local pet coke).
With inputs from G Balanchandar in Chennai