Western countries avoided cargoes from Russia ahead of the European Union’s ban on Russian coal that came into force on August 11, aimed at reducing the Kremlin’s energy revenues due to its invasion in February. The ban forced Russia to target buyers such as China and India and sell at a deep discount. Russian thermal coal with a heating value of 5,500 kilocalories (kcal) traded around $150 per metric ton on a cost-and-freight basis at the end of July, while coal of the same quality in the port of Newcastle, Australia, was valued at more than $210 per metric ton on a free on board (FOB) basis. Some Chinese traders expect more Russian coal to flow into China in the fourth quarter, when utilities in northern China build stocks for the winter heating season. Shipments of Indonesian coal in July, mainly cheap, low-grade thermal coal with a calorific value below 3,800 kcal, were 11.7 million metric tons. That was up 22% from June, but down 40% from a year earlier. China has reduced overall coal imports in recent months amid growing domestic production. Power plants in southern China stepped up bids to buy Indonesian coal in August as it is cheaper than domestic coal, while demand for coal-fired power generation was boosted by a record heat wave. Indonesian thermal coal with a heating price of 3,800 kcal traded at about $78 per metric ton on an FOB basis last week, which would still be below about 690 yuan (about $100) for local coal when factoring in shipping charges. China’s customs data showed zero coal shipments from Australia in July.
