Russian Coal Exporters Lose Ground On International Markets — Intelligence

Russian coal exporters are experiencing a decline in international market share due to rising logistics costs, import tariffs, and an inability to further lower prices, according to Ukraine's Foreign Intelligence Service (FISU). Over the first eight months of the year, Russian coal deliveries to China decreased by 10.8% year-on-year, reaching 53.15 million tons.

During this period, coal imports from Mongolia surged by 48.9%, reaching 78.39 million tons, while shipments to Indonesia hit 121 million tons. In total, China imported 310 million tons of coal, representing a significant drop in Russian market share.

Mongolia benefits from cheaper logistics and zero tariffs, making it an attractive alternative to Russian coal from Kuzbass, which faces logistical challenges through the overcrowded Eastern Polygon railway. Import tariffs on Russian coal in China remain at 3-6%, while Mongolia, Australia, and Indonesia enjoy zero rates under free trade agreements. Russian coal companies have offered discounts of around 10%, but there is little room left to reduce prices further without incurring losses.

Thermal coal exports are particularly vulnerable to competition from Chinese mines, import tariffs, and rising transportation costs. Starting in October, Russian railway tariffs are set to increase again, and demand for gondola cars is driving up costs. As a result, the profitability of thermal coal exports from Kuzbass via Far East ports has dropped by 30% compared to August and has tripled compared to last year.

The challenges are not limited to China, as Russian exporters have reduced coking coal deliveries to Turkey by 30% due to logistical complications in the Black Sea and rising railway tariffs. Russian coal companies are now struggling to maintain their competitive edge in foreign markets while facing higher domestic costs.