Dry Cargo Update: Russian Seaborne Coal Exports

On the second anniversary of Russia’s invasion of Ukraine, the US Treasury has enacted further sanctions on Russian coal with the aim of undermining the Russian export market. Two notable names cited in the document are SUEK and Mechel, major coal exporters in Russia. While the sanctions’ mention of these names is unlikely to have an immediate effect on exports, it may still make some traders hesitant to import directly from Russia in the future.

Russian coal exports have already been hovering at multi-year lows since October. The seasonal decrease in Far East exports as a result of worsening rail logistics in the winter has shown itself once again this year. However, in the past few months, there have been additional challenges that have worsened the situation for Russian exporters. In October, Russia imposed new exchange-rate-linked duties on a range of goods, including coal, as a way to raise funds for the government. Although these duties were lifted in January, they have now been reinstated in March. On top of the domestic duties, the largest importer of Russian coal, China, imposed import duties in January on countries without bilateral free-trade agreements, which includes Russia.

In addition to the above, the effect of the sanctions also appears to be finding some traction. There are reports of Chinese banks with US dollar exposure limiting their ties to Russia, as they fear they could be treading a fine line with the US sanctions. The tougher scrutiny on issuing letters of credit to pay Russian miners may cause difficulty in future trade between the countries. Newswires also cite anonymous sources reporting that Indian traders are becoming more hesitant about Russian cargo.

As a result, Russian coal exports have lately been pressured by a range of seasonal, economic and political factors. According to vessel-tracking data (for 10k+ dwt vessels), seaborne coal exports in the fourth quarter of 2023 fell to 42.7 Mt, the lowest since 2019 and down 8.5 Mt from 2022. The weakness persisted into January, with only a minor improvement in February, with estimated exports of 14.0 Mt of coal last month. Most of the decline in volumes has come from the Far East ports, as expected, as rail and port logistics are adversely affected every winter. While exports from the Far East are down year-on-year (-1.1 Mt) in the first two months of this year, volumes out of the Black Sea have seen an even stronger year-over-year decrease of 1.4 Mt, with the Baltic and North Sea near-flat. The tonne-mile impact of the Far East volumes is not as significant, as the majority of the trips are short-haul to China and South Korea. However, the fall in Black Sea fronthaul volumes and an increase in Baltic Sea exports to Turkey and East Med have meant that the tonne-mile demand for Russian coal in February has fallen nearly 25% year-on-year.

The effect of these changes differs across sizes. Over the past year, the coal trade out of the Black Sea has gradually switched from a majority Capesize trade to a 20% share in February. This was a result of much of the cargo shifting into the Panamax segment in Q3-Q4 2023.

The possibility that the Suez restrictions are to blame for the decline in Black Sea volumes seems unlikely, as most of the Russian cargo continues to travel through the canal largely unaffected. Instead, data points to the contrary, as there’s more Russian cargo travelling through the canal in February than there was in December. In fact, from December to February, the volume of coal cargo from the Baltic Sea travelling fronthaul via the Suez Canal more than doubled, from 0.8 Mt to 1.7 Mt.

You can read this and more in the March edition of the SSY Monthly Shipping Review. If you would like to sign up for a subscription or discuss the possibility of complimentary access for key broking clients, please email

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