Russian petroleum coke exports to China by land have been decreasing in the last few months because of Covid-19 border restrictions, even as demand for anode-grade coke in China remains strong.
Russian refineries exported nearly 11,100t of coke by rail to China in February, up from 7,500t in the full month of January, but down by about a third from the roughly 16,000t shipped in February 2020. It is down even more significantly from the nearly 18,000t shipped in December 2020.
Russian exporters are cutting rail shipments through the typical Kazakhstan-China border route because restrictions on the Chinese side are resulting in expensive delays. Cargoes of Russian 2-3pc sulphur anode-grade coke en route to western China's Xinjiang region have been getting stuck in Kazakhstan because of Covid-19-related policies, with authorities clearing trains very slowly in order to inspect and disinfect them. Some coke that shipped from Russian refineries in October has only entered China within the last month or so because of the backlog.
It is unclear how much petroleum coke is currently awaiting transit, but as of 26 February, there were about 12,000 abandoned rail wagons loaded with various commodities, Kazakhstan's KTZ-Freight Transportation company said. Another 250 covered wagons loaded with grain have been redirected and returned to the original loading stations.
The backup led the Kazakhstan railway service late last month to issue a ban on shipping goods to China through its Dostyk station, citing the "restrictive measures" from the neighbouring country. Cargoes transiting from Russia to China are banned from 1-31 March. Even cargoes originating or ending within Kazakhstan are restricted from 1-15 March, excluding container shipments. The company plans to use this time to help clear the abandoned trains and grain carriers across the Chinese border.
The railway had similar bans in December and January, a trader said. Some cargoes were even shipped through Mongolia instead, even though this is a much more costly journey from most refineries.
Shippers had hoped that Chinese authorities might relax restrictions following China's lunar new year holidays from 11-17 February. This may have been why there was a rise in February rail shipments, with the increase coming mainly from Rosneft's Komsomolsk refinery in southeastern Russia and Gazpromneft's Omsk refinery in Siberia. But most shippers were reluctant to transport cargoes on this route, as cargoes shipped in October-November are still sitting at Dostyk, racking up demurrage costs.
The lower exports to China are not because of lack of supply. Petroleum coke production at the Russian refineries was 306,000t in January, compared with 296,000t in December 2020. Lukoil's Volgograd and Perm refineries were the leaders in coke production, with 108,800t. Taneko's Nizhnekamsk refinery produced about 69,500t of the product in January. Rosneft's Angarsk and Novokuibyshevsky refineries produced a total of about 34,900t of petroleum coke.
Neither was it for lack of demand. Petroleum coke prices in China are persistently high after the end of the lunar new year holidays in the country. State-owned refiner Sinopec increased the price of different coke grades by $9.26-12.35/t because of limited supplies. And the price of Russian anode-grade coke with 3pc sulphur content on a cfr China basis was about $180/t at the end of February, according to Russian trading firm Suek. But the restrictions through Dostyk station resulted in the company making no export sales.
There are likely still significant export sales to China that are not captured by the Russian railway data. Russian refineries have in the past shipped coke to eastern China by sea from the Ust-Luga port in the Baltic Sea near St. Petersburg. But exports on this route have been declining as well. Russian coke deliveries to Ust-Luga in January fell by 38pc to 40,300t from December. And Russian refineries had no plans to export petroleum coke through Ust-Luga at all in February.
But this does not necessarily mean that less coke was shipped to China by vessel in January. Coke can also export through the Riga port in Latvia, which is accessed by rail through Belarus. Rail shipments to Belarus started up in December, at 27,800t, increased in January to 73,300t, and totalled 54,000t in February, according to the railway freight forwarding data. Railway plans suggested this was mainly from Taneco's Nizhnekamsk refinery last month.
Russian seaborne coke exports are also on offer to Indian buyers, with 3pc sulphur anode-grade green coke offered at $250/t fob or around $300/t delivered, one calciner said. This is still at a discount compared with Chinese-origin green coke on which Indian buyers typically rely, since that material is in such high demand domestically.
Overall, Russian coke exports increased to 153,600t in January from 134,100t in December 2020. February data is not yet available.
