Ports offer alternative routes for disrupted Russian coal

Russia’s largest coal exporter Suek should be able to secure alternative port capacity for more than 1m tonnes/month of loadings impacted by the recent halt in shipments via the key export hub of Murmansk, port sources said.

Suek – one of the world’s largest coal miners, producing more than 100m tonnes last year – declared force majeure last week on exports from the key northwest export port of Murmansk, after a bridge collapse halted all coal railings to the terminal.

Although shipments should partially resume on 23 June via a detour rail route, Suek has been actively seeking alternative outlets for its exports, according to a source close to the company.

“We can see some volumes being diverted from Murmansk to other ports, including to ports on the Black Sea,” said a source at the Taman bulk cargo terminal, in southwest Russia.

And on the Baltic, Riga port spokeswoman Liene Ozola said the export hub could also potentially handle Suek’s supplies, if required.

“If [state-owned] Latvian Railways agrees with Russian Railways to divert additional cargo to Riga, we have full capacity to accept and process those volumes,” she said.

She said there were 35 stevedoring companies operating at Riga port, some of which were multifunctional.

“Depending on the situation and market conditions, they are able to adapt and process various types of cargo,” she said.

She noted 21 terminals at the port actively handled various types of bulk cargo.

“[This includes] a new bulk cargo terminal for coal on the island of Krievu with a total cargo transhipment capacity of up to 17m tonnes per year.”

However, traders said the high cost of railing coal the lengthy distance from mines to Riga and the euro-per-tonne costs may deter Suek from utilising such a route to market.

“Easily replaced”
Guillaume Perret, director of consultancy Perret Associates, said earlier this week the Murmansk disruptions could equate to a 3-4m tonnes reduction in supply to Europe and the Mediterranean region for the remainder of the year.

“[But] the potential loss could be relatively easily replaced by additional supply from other Russian exporters, Colombian material and healthy stocks in northwest Europe,” he added.

Stocks at four main Amsterdam, Rotterdam and Antwerp (ARA) coal import terminals were seen last at 5.84m tonnes, albeit 1.5% lower on the week and a three-week low.

“So far there are still vessels planned to arrive from Russia and no cancellations,” said a source at one import terminal.

He mainly attributed the lower stocks to weakening seasonal demand from utilities.

European coal prices have retreated from last week’s multi-week highs as easing concerns of disruptions to Russian supply combined with relatively high stocks and waning demand, market participants said.

The front-month API 2 contract traded last at USD 45/t on Ice Futures, down 5% from a week ago.
Source: Montel

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