Russia, which faces harsh Western sanctions following its invasion of Ukraine, warned the European Union in April against sweeping coal sanctions, saying they would backfire because the fuel would be redirected to other markets.
India has refrained from condemning Russia, with which it has long-standing political and security ties, while calling for an end to violence in Ukraine. New Delhi defends its purchases of Russian products as part of an effort to diversify supplies and says a sudden halt would drive up global prices and hurt its consumers.
US officials have told India that there is no ban on energy imports from Russia but that they do not want to see a “rapid acceleration”.
Yet, while European importers avoid trade with Moscow, Indian buyers snap up huge quantities of Russian coal despite high transport costs.
Its purchases of coal and related products increased more than sixfold in the 20 days to Wednesday from the same period a year earlier, to $331.17 million, according to unpublished government data. Indian reviewed by Reuters.
Indian refiners have also snapped up cheap Russian oil shunned by Western countries. The value of oil trade between India and Russia in the 20 days prior to Wednesday was multiplied by more than 31 to reach 2.22 billion dollars, according to the data.
India’s commerce ministry did not immediately respond to a request for comment on Saturday.
“Russian traders have been liberal with payment channels and accept payment in Indian rupees and UAE dirhams,” a source said. “The discounts are attractive, and this trend of increased Russian coal purchases will continue.”
COAL PURCHASES WILL CONTINUE
Offshore units of Russian coal traders such as Cyprus-based Suek AG, KTK and Carbo One in places such as Duba and Singapore have offered 25-30% discounts, triggering mass purchases of thermal coal by traders providing utilities and cement companies, the sources said.
The second source said Suek’s Singapore-based unit also accepts payments in dollars.
Suek and KTK did not immediately respond to requests for comment. Reuters could not immediately reach Carbo One.
The EU ban has prevented new coal contracts from being concluded and, by mid-August, will force member countries to terminate existing contracts.
India bought an average of $16.55 million worth of Russian coal a day in the three weeks to Wednesday, more than double the $7.71 million it bought in the three months after the February 24 Russian invasion, according to Reuters calculations.
Oil purchases averaged $110.86 million per day during the 20-day period, more than triple the $31.16 million it spent in the three months to May 26.
Bulk purchases of Russian coal by India are expected to continue, with June imports expected to be the largest in at least seven-and-a-half years, according to ship tracking data from Refinitiv Eikon.
Bulk shipments of Russian thermal coal began reaching India in the third week of May, with orders coming mainly from cement and steel companies and traders, according to shipment data compiled by a Indian coal trader.