Russian shipments to Ukraine fall

Deliveries of Russian coal to Ukraine will fall sharply this month after Moscow implemented new regulations.

This could limit coal production in Russia, given that many companies' stocks are already at record highs, according to market participants. And there is little scope to redirect volumes.

Under new regulations that came into effect on 1 June, companies must obtain permits from Russia's economic development ministry to export to Ukraine.

"Some railcars that were loaded with coal bound for Ukraine in May are currently idled at border crossings because of the new regulation. This situation has also resulted in delays to transit shipments," a source at one mining company says.

Some suppliers say state-run Russian Railways (RZD) has approved a minimal volume of coal for delivery to Ukraine this month.

"RZD only sanctioned 12,000t of our 200,000t export application for Ukraine this month, but there is still no authorisation from Russian customs even for this small volume," a source at a Russian producer says. "We do not expect the situation to improve in the second half of June and have been forced to cut output."

Ukraine's reliance on Russian coal imports has risen sharply over the past two years. Most of the coal imported into Ukraine this year has come from Russia.

Ukraine last year upped its Russian coal imports by 15.4pc to almost 15mn t, accounting for around 70pc of total receipts, Ukrainian statistics service Ukrstat says.

Limited Russian coking coal supply could boost opportunities for US suppliers to sell more material into Ukraine. But Ukrainian consumers have only limited scope to fully replace Russian anthracite and metallurgical coal with seaborne deliveries from elsewhere, because of a lack of capacity at the country's ports.

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