Low European-delivered thermal coal prices and high utility inventories caused May exports of Russian thermal coal to dip for the first time in 10 months, according to trading sources.
Low European-delivered thermal coal prices and high utility inventories caused May exports of Russian thermal coal to dip for the first time in ten months, according to trading sources.
Russian thermal coal exports in May fell 4.3% on the year to 13.62 million mt, according to Platts Analytics.
"Huge stocks, little demand and sellers unwilling to drop prices by $5-$10 in May led to a negative netback [into CIF ARA]," a trading source said.
Platts FOB Russia Baltic price assessment dropped significantly to an average $49.40/mt in May, down 41.7% from the prior-year month average.
However, with Ventspils-Rotterdam Panamax spot freight rates averaging $8.35/mt over the same period, and Platts Europe-delivered CIF ARA 15-60 day prices averaging only $57.10/mt, the overall cost of shipping Russian coal into Europe came in at a premium of 65 cents to the delivered price, according to Platts calculations.
Russian coal producers cut June output by 15% year on year, according to Platts Analytics data, which should lead to a significant drop in July, similar to the US, a trading source said.
Russian thermal coal exports shipments to Europe are expected to fall further over the next few years as Europe moves to cleaner forms of energy and market competition intensifies there with Colombia and the US.
The new Taman coal terminal on the Black Sea will have an impact on Turkish markets and boost Russian exports, a source said.
According to thermal coal traders, although Russian producers continue to target the European market , they have been increasing their efforts to grab more market shares in key Asian markets such as South Korea and Taiwan.
Total Russian thermal, lignite and coking coal output was 35.5 million mt in May, flat on year.
Russia's coal reserves amount to 19% of the world's total 173 billion mt, according to Climate Scorecard.
