(Montel) Russian hard coal production declined nearly 2% in the first half of the year, despite increased exports, data showed on Wednesday, amid a possible upturn in domestic usage of gas and as sanctions hamper equipment imports.
The country produced around 167m tonnes of hard coal over the six-month period, which was 1.7% below January-June 2022, state statistics service (Rosstat) figures showed.
Coking coal production was also 2.7% lower, at 49.5m tonnes, but the output of anthracite – which is the highest grade of coal and is primarily used as a domestic heating fuel or in metallurgy – grew 2.6% to 13.2m tonnes.
Despite the overall reduction in hard coal output, total coal exports – of all grades – in the first half of 2022 grew 4.7% to 101m tonnes, according to data provider DBX estimates.
This was spearheaded by a 67% increase in shipments to China, totalling an estimated 43m tonnes, and a 10% rise to South Korea, to 13.5m tonnes.
“Russian coal exports started the year strongly, but have recently been coming down,” said an analyst with a coal trading house.
DBX estimates showed June exports at 16.5m tonnes, down from a monthly average of around 18m tonnes from March-May.
Using more gas
Russia, said the analyst, “might be trying to use more gas – as it's more freely available – which is negative for domestic coal consumption and ultimately for production”.
Rosstat data showed thermal power production grew 3.6% in January-June to 382bn kWh, while hydropower output was down 7% at 97.5bn kWh, suggesting some increased gas usage in power generation.
This could explain the drop in coal production and the uptick in coal exports, “particularly when then bulk of the export increment was in the early part of the year”, the analyst said.
Sanctions impact?
DBX also cited the possible impact of sanctions on Russia’s coal production.
“This decline could be attributed to sanctions restricting imports of technology and mining equipment, which might have impacted production capacity,” it noted.
Many countries, particularly in Europe, have imposed sanctions on Russia in response to its invasion of Ukraine. This includes an EU-wide ban in Russian coal imports since August last year.
This was also a reason for Russian miners to cut back on production, said some market participants.
“I thought, with the ongoing embargo on Russian coal... this would bring an even sharper drop in coal production than just 2%,” said a head coal trader with a Poland-based trading house.
