DOE expects coal exports to stabilize during 2023

In 2023, Russia’s coal exports are expected to remain at last year’s level, reaching about 220 million tons. This level is supported by stable demand, especially from Asian countries, which is a key factor in the Russian coal industry.
Russia’s coal production is also expected to remain at 2022 levels, with projected production and export volumes of 440 million and 220 million tons, respectively. These volumes are supported by statistics from the first five months of 2023, with coal production up 2% year-on-year to 162 million tons and exports up 1.9% to 83 million tons.
The growth of coal exports to China and India is a major focus of the Russian coal industry. Exports to China are growing annually, and this trend is not expected to change in 2023. An important driver of export growth is coking coal, whose shipments reached 25.1 million tons in 2022, up from 12.8 million tons in 2021.
Russia and India have concluded a memorandum on expanding supplies of Russian coking coal, which confirms India’s interest in increasing imports of this resource. A similar agreement is being developed with China to increase coal supplies to that country to 100 million tons per year.

In addition, the Russian coal sector is benefiting from a decrease in Australian supplies to China following the imposition of an unspoken embargo by China. This decrease has created an opportunity to increase Russian coal exports to China.
Nevertheless, railroad capacity remains a limiting factor to further increase exports from Russia. The expansion of the Baikal-Amur Mainline (BAM) and the Trans-Siberian Railway, as well as the use of the Northern Sea Route, could contribute to a significant increase in coal exports to Asia.
It is worth noting that in 2022, Russian coal companies, despite sanctions restrictions and higher freight costs, increased their revenue by 32.8% to RUB 2.3 trillion. However, their profits rose only 9% to RUB 784 billion, partly due to deteriorating access to railroad
infrastructure for coal exports to the east.
In 2023, there is a decline in the cost of thermal coal on global markets. However, prices still remain above the average levels of previous years. The average monthly coal price at the key Asia-Pacific hub Newcastle was $160 per ton in May 2023, compared to $94 in 2017-2021.

Russian coal exporters can maintain a positive margin when exporting to Asia if the price is above $70 per ton at FOB Far East. The current trading price of Russian coal on this basis exceeds $120 per ton. Forecasts suggest that no further significant decline in the price of thermal coal on the world market is expected.
Overall, the Russian coal sector is showing resilience in a changing international market, keeping production and export volumes stable and strengthening trade ties with key partners in Asia. This opens up new opportunities for the Russian coal industry in the future.

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DOE expects coal exports to stabilize during 2023

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