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Liquidity Crisis to Persist for Russian Thermal Coal

 


November 8, 2024 - The Russian thermal coal market, particularly for the premium grade 6,300 kcal/kg GAR, is facing a significant liquidity crisis due to international sanctions, logistical hurdles, and dried-up financing. Since the invasion of Ukraine, Russian coal exports have shifted from European to Asian markets, with initial demand from China and India. However, as discounts have diminished and freight costs soared, Russian coal has become less attractive. Liquidity is evaporating, financial institutions are hesitant to fund new coal projects, and logistical constraints are leaving thermal coal suppliers struggling to meet demand.

 


The future of Russian coal exports remains uncertain as the liquidity crisis for 6,300 kcal/kg GAR thermal coal is expected to persist. With tightening profit margins and diminishing rail transport availability, Russian exporters may struggle to secure competitive pricing. In South Korea, escalating power demand may drive a temporary increase in Russian coal purchases, but this is contingent on market conditions. Without significant changes in supply chain dynamics or a revival in demand, the Russian coal industry faces a challenging road ahead.