Northwestern Europe prefers Russian coal

Countries in northwest Europe increased Russian thermal coal imports by 2pc or 360,000t on the year to 17.36mn t in the first half of 2019, Eurostat data show.

Supplies from Russia were up at all the large importing hubs in the region, while shipments of less-competitive coal from Colombia and the US declined.

Russian coal accounted for 60pc of northwest Europe's coal imports in January-June, up from 54pc a year earlier, taking market share from Colombia and the US. South Africa increased its share slightly to 6pc, from 4pc in the first half of 2018. Colombia and the US switched their supplies to alternative higher-margin markets, including southeast Asia. Increased freight rates this summer further depressed exporters' interest in supplying to Europe.

The Netherlands and Germany, the largest buyers of Russian coal, raised their imports in January-June, offsetting declines in Russian dispatches to other countries in northwestern Europe.

Imports from Russia to the Netherlands increased by almost 8pc on the year to more than 7.9mn t in the first half of the year, while the country's overall imports fell. Germany's receipts from Russia rose by over 17pc to nearly 5.23mn t, replacing declining imports from the US.

But France, the third-largest recipient of Russian thermal coal in the region, cut Russian imports by 4pc to 1.42mn t in the first half of the year, in line with an overall fall in imports, Eurostat data show.

Total net receipts of thermal coal from non-EU members to northwestern EU countries reached 29.03mn t in January-June, down from 31.66mn t a year earlier. The region's total coal imports are likely to remain low in the second half of 2019, as large consumers that are able to switch between fuels prefer burning natural gas.

Coal consumption in northwestern Europe could keep falling in the next five years amid the closure of coal-fired power plants in several countries. The UK, France, Sweden, Slovakia, Ireland and Austria have already announced coal phase-outs by 2025 or earlier. These countries together imported almost 9mn t of Russian thermal coal in 2018, which accounted for more than 20pc of exports from Russia to northwestern Europe. Coal exports from Russia in a western direction could decline by 60pc compared to 2018 to 30mn-49mn t in 2025, according to the Russian energy ministry's forecast.

Find more news, price information and market analysis on Russian coal exports in Argus Russian Coal report.