MOSCOW (Reuters) – Infrastructure bottlenecks in Russia worsened with the winter season as rising demand for Asia-bound cargoes amid European sanctions on Moscow led to rail jams and worsened prospects for coal sales to China, according to data and market sources.
Russian President Vladimir Putin has urged domestic businesses to forge closer ties with Asia and Latin America after Europe introduced sweeping sanctions against Moscow after it sent thousands of troops into Ukraine on Feb. 24.
The European Union also introduced an embargo on Russian coal imports starting from Aug. 10 as part of the Ukraine-related sanctions.
“There has been a large-scale logistical turn towards the east this year, which could not have been predicted in advance. Today this direction is seeing very heavy demand, not only for coal exports but for the transportation of goods in all sectors of the economy,” a spokesman for the Russian Railways said.
China’s coal imports from Russia continued to slip in October from previous months, according to the latest available data, as logistics bottlenecks in Russia hampered supply and lower demand in China also capped appetite for the fossil fuel.
Arrivals of Russian coal stood at 6.43 million tonnes in October, down from 6.95 million tonnes in September and a record 8.54 million tonnes in August, the General Administration of Customs said.
But it was still 26% higher than the level in October 2021.
Russian coal export constraints could prove even more painful for China as fuel demand in the power generation and heating sectors picks up in winter. Shortages of available railcars have also exacerbated the transportation problems.
According to Russian Railways data seen by Reuters, total eastward cargo exports dropped to 132.4 million tonnes in January-November from 135 million tonnes in the same period last year.
Russia’s key coal producing region of Kuzbass in Western Siberia will likely miss its coal export target this year and next over persistent logistic bottlenecks, the local governor Sergei Tsivilyov said last month.
He said the region was due to supply 58 million tonnes for exports to the east this year, while Russian Railways will manage to export only 48.5 million tonnes “at best”.
For next year, the plan stands at 63 million tonnes, while Tsivilyov said the railways had offered to transport 52.5 million tonnes.
(Reporting by Gleb Stolyarov; writing by Vladimir Soldatkin; Editing by Gareth Jones)