Russia’s coal supply is now one of India’s favoured supplier from attractive prices
India’s coal imports from Russia hit record highs in March 2022. Kpler, a commodity market researcher’s data revealed Indian buyers are now cashing in on Russia’s isolated supply due to the sanctions.
Rupee-rouble a possibility?
Kpler added it found at least 1.06 million tonnes of coking coal typically used for steelmaking, and thermal coal, used primarily for power generation, due at Indian ports in March 2022. This is the highest since January 2020.
With the scale of sanctions on Russia, it only has China and India to look to for high volume imports. The tradeoff is slashed margins. Another hurdle both parties to face is payment terms. With Russia plucked off SWIFT, India can only hope the Rupee-rouble trade comes to effect. Rupee-rouble trade is a payment mechanism which allows Indian exporters to be paid in Indian rupees for their exports to Russia instead of standard international currencies such as dollars or euros. Under this arrangement, a Russian bank will need to open an account in an Indian bank and vice-versa.
Another industry observer Coalmint, said about 870,000 tonnes of Russian coal have already delivered or are expected to be delivered at Indian shores until 20 March 2022, the highest since April 2020. Aditi Tiwari, Coal Market Head at Coalmint disclosed, “Indian buyers have taken a backseat after the SWIFT ban and sanctions on Russia. They are looking out for alternatives from Australia and the United States.”
Despite the sanctions, Indian traders did not appear concerned. The country is exploring ways to set up a rupee payment mechanism with Russia to soften the blow on New Delhi of Western sanctions imposed on Russia. V R Sharma, Managing Director of Jindal Steel and Power Ltd (JSPL) JNSP.NS, agreed importing from Russia would be difficult unless there is a rupee-rouble trade. He said that if the system is approved, JSPL can import coal at affordable and cheaper prices from Russia. JSPL is among the importers from Russia in March, along with Tata Steel TISC.NS, Kalyani Steels KLSL.NS and JSW Steel JSTL.NS.
Marine Online News Team
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