Thermal coal exports from Russia to South Korea are ahead of supplies from Colombia
Following the decision of the South Korean government to limit imports of Russian thermal coal from the spot market by state-owned power generating companies by the end of 2023, Russian exports have lost ground in recent months to supplies of Colombian thermal coal.
However, heavy rains in Colombia, which began in last month and disrupted production, as well as increased transport costs between the Atlantic and Asia-Pacific, led to Russian shipments regaining market share from Colombia within a month, market participants noted.
According to S&P Global Commodities at Sea, South Korea imported 2 million tons of Russian thermal coal in July, while Colombia managed to deliver only 700,000 tons of the material in a month.
“Colombian exports to South Korea have lost momentum recently.” , said the Colombian manufacturer. “Colombia mines have recently experienced heavy rainfall, which has negatively impacted production and increased inventories.”
Some market participants said price could also play a decisive role in changing the preferences of South Korean buyers, as imports from Russia high-calorific thermal coal was relatively cheaper to ship than Colombian coal.
Market participants note that the Russian government's abolition of export duties on thermal coal at the end of April was a relief for the country's suppliers, who had found it difficult to compete with material from Australia , Colombia and South Africa in the high-valence coal sector.
“South Korean IPPs [import-powered power plants] and generation companies are buying a lot of Russian coal, which is supporting the price to some extent,” said an Indonesian trader working with South Korean market. “Although most of the volumes are exported under long-term contracts, as Colombian freight has jumped significantly, making CFR prices expensive [for South Korean buyers].”