Russian rail exports outpace seaborne deliveries

Russian coal exports increased by 3pc, or about 6.3mn t, on the year to almost 191mn t in 2018, data from the energy ministry show. Most of this growth came from rail deliveries, which surged by 32pc to 43.5mn t, rail data show.

Overseas deliveries missed the ministry's forecast for last year of 200mn t, as the pace of growth slowed after 2017's sharp rise, mainly because of widespread infrastructure limitations. Meanwhile, exports still outstripped deliveries to destinations in Russia, accounting for 51.5pc of total supplies.

The increase in Russian coal exports was mainly attributed to higher deliveries through overland border crossings. The biggest jump in exports last year was to eastern Europe — up by 52pc, or 5.7mn t, to 16.8mn t, with deliveries to all countries in the region up on the year. But the main driver of the rise in exports to eastern Europe was Poland. The country is still struggling with a shortfall in domestic output, prompting it to boost imports.

Shipments to former Soviet Union (FSU) countries were also on the rise, climbing by almost 36pc, or 4.4mn t, to 16.7mn t last year, with deliveries to most FSU countries up on the year, especially deliveries to Ukraine — the FSU's key Russian coal importer.

Supplies to China through overland border crossings rose by 22pc, or 1.6mn t, on the year to 8.9mn t in 2018. Insufficient rail and port infrastructure in Russia's far east and China's restriction on seaborne coal imports from the end of 2018 prompted Russian suppliers to redirect volumes to overland routes. Additionally, suppliers almost fully halted shipments through the North Korean port of Rajin last year, which was mainly used to export coal to China.

Russian seaborne coal exports also increased last year, but more modestly — by just under 5pc on the year to 182.3mn t, according to port data. This was a result of a sharp drop in shipments from Ukrainian ports, after state-owned railway operator RZD stopped authorising Russian coal deliveries to these terminals in May. Russian coal exports from Ukrainian ports fell by 47pc to 2.3mn t last year. Exports from Russia's southern ports also fell in 2018, by 3pc to 11mn t, reflecting transport difficulties and lower demand in Turkey — the main recipient of Russian coal loaded at ports in the south.

But exports from northwest ports rose, as some firms redirected supplies from southern ports. And demand for Russian coal from Europe was steady last year, despite the overall drop in European thermal coal imports. Exports from northwest Russian ports rose by 3pc to over 57.8mn t last year, while Russian coal exports from terminals in the Baltic states were up by 18pc, at 20.8mn t, port data show. Exports from Russia's far east ports rose by 7pc from 2017 to 90.3mn t last year, reflecting high demand and coal prices in Asia-Pacific.

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