Breaking News
Investing Pro 0
New Year’s SALE: Up to 40% OFF InvestingPro+ CLAIM OFFER

Infrastructure bottlenecks hamper Russia's booming coal exports to China

Commodities Oct 25, 2022 06:22AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A worker stands next to a cutting wheel of an excavator at Borodinsky opencast colliery, owned by the Siberian Coal Energy Company (SUEK), near the Siberian town of Borodino east of Krasnoyarsk, Russia April 19, 2022. REUTERS/Alexander Manzyuk

By Muyu Xu and Maxim Nazarov

SINGAPORE/MOSCOW (Reuters) - Russian coal exports to energy-hungry China have jumped by about a third this year but the supply boom is being constrained by transport infrastructure limitations, industry sources and officials said.

China is seeking coal supplies from overseas, in particular after recent COVID-19 outbreaks in the major coal mining regions of Inner Mongolia and Shaanxi forced many mines to close, while coal demand at power generation and heating sectors will soon pick up with the coming of winter.

The Kremlin plans to increase its energy supplies to Asia, China in particular, to offset a slump in exports to the West, which has imposed sanctions on Russia over the conflict in Ukraine.

Russia is the world's sixth-largest coal producer and one of top coal exporters, along with Indonesia and Australia. Its share of global coal exports reached 17% last year with supply of 223 million tonnes.

But now with more exports heading east towards Asia as opposed to west towards Europe, bottlenecks are appearing.

"Many of us were informed by the sellers that there will be delays on loading and arrivals, which causes trouble to our business," a Chinese coal trader said.

Another source said that some traders were simply told by sellers or miners that a coal shipment was cancelled due to the lack of rail capacity and could be delayed for weeks.

Russian First Deputy Prime Minister Andrei Belousov has acknowledged the problem with infrastructure constraints, saying this month that the situation with coal exports and congestion on the rail system had not stabilised, though it was improving.

China's coal imports from Russia fell to 6.95 million tonnes last month, down from a peak of 8.54 million tonnes in August, according to China's customs data.

According to Russian transport industry sources, Russia has increased coal supplies to China by railways by about a third this year, to 27.6 million tonnes in the January-August period.

WINTER DEMAND

But the increase in cargo traffic has led to slower deliveries.

According to a Reuters analysis, it took about 12.6 days to deliver a coal cargo from fields in Siberia, such as Kuzbass, to Russia's Pacific ports in July-September, compared with 11.3 days on average in the same period last year.

On average, delivery time across Russia has increased by a fifth, or 1.4 days, according to Reuters analysis of railway data, and timings may increase in the winter due to the railway congestion and port capacity limitations.

"We would expect China's coal imports from Russia to decrease due to the cool weather, which will limit port loading, and the rail logistics cap will also help to put a lid on," the Chinese coal trader said.

Of Russia's total of 223 million tonnes of coal exports last year, 49 million tonnes were delivered to Europe, according to the Energy Ministry.

But Russia now expects its coal exports to decline in coming years due to the Western sanctions over the Ukraine conflict, and U.S., European Union and British embargos on Russian coal imports.

According to Russian government expectations, coal exports may fall by 22% this year and by a further 31% in 2023.

But at the same time, the rush of east-bound exports is getting bogged down.

"A lot of railcars accumulate, congestion is formed at port stations ... Turnaround times for railcars are increasing significantly. Shippers are looking for empty railcars," a Russian transport industry source said.

Russian Deputy Prime Minister Alexander Novak said Russia plans to increase the capacity of its infrastructure, including that of its eastern ports, where capacity is expected to increase by between 55 million tonnes and 211 million tonnes per year by 2031 from 150 million tonnes now.

Infrastructure bottlenecks hamper Russia's booming coal exports to China
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email