EUROPEAN buyers hamstrung by an 8 billion euro ($11.6 billion) a year ban on Russian coal are looking to the Hunter for replacement cargoes, according to coal industry figures quoted in trade journals.
The April 6 edition of the weekly Australian Coal Report (ACR) said Capesize ships were already en route to Europe from Newcastle as a result of the Ukraine war disrupting Russian coal exports.
Then, last Friday, the European Commission announced a ban on Russian coal imports, with a wind-down period of four months to allow for existing contracts.
The commission is the governing body of the EU and its 27 member nations. Its April 8 statement said the EU bought about one quarter of Russia's coal exports, and the ban was on the purchase of "all forms of Russian coal".
Australian Bureau of Statistics export data shows nine EU countries and the UK regularly buying Australian coking coal - most of it likely from Queensland - with the Netherlands the only named European country buying Australian thermal coal for power stations, buying 1.48 million tonnes last year.
The April 6 ACR said cargoes of Capesize vessels - some of the largest bulk carriers in the coal trade, capable of carrying up to 180,000 tonnes of coal at a time - had left Newcastle for Europe.
Ships had been booked for cargoes of 5500-kilocalorie coal costing about $US200 ($268) a tonne. This cheaper, high-ash coal was selling for as little as $US35 ($46.90) a tonne two years ago.
"The main European players are stepping away from Russian thermal coal and there is only so much South African and United States coal that is available," ACR quoted a market source as saying.
ACR said millions of tonnes of Russian coal destined for Europe would be diverted to other markets, with the possibility of "huge changes in trade flows".
India had been "actively re-selling cargoes of Australian thermal coal to Europe in recent weeks". India had not joined the West in sanctioning Russia and was likely to become a major destination for displaced Russian coal.
Western-owned ships are also unable to carry Russian coal under various sanctions regimes, and so Russia is reportedly trying to find its own vessels to sell coal, and is paying the freight costs usually borne by the buyer.
In the Hunter and Gunnedah coal fields, persistent wet weather has made it more difficult for most open-cut mines to hit production targets, which has an upside in that the tightness of supply is credited with helping to keep prices higher than they might have otherwise been.
The ACR's weekly price summaries show top-quality 6000-kilocalorie Newcastle coal peaked on March 11 at $US375 ($504) a tonne.
Despite falling steadily since to $US260 ($350) a tonne, they are still three times the $US87 ($117) a tonne price of a year ago.
Thermal thermal coal is predicted to keep falling but the latest March predictions are up to 50 per cent higher than the December estimates.
