Ukrainian exporters buy back sold coal cargoes

Ukrainian thermal coal traders who have sold export cargoes to the seaborne market are now buying back tonnes from their customers because of the domestic shortage of low calorific coal in the country, physical coal traders told ICIS.

Ukraine is traditionally a major coal supplier to Turkey, Greece and Hungary but has recently become a coal importer.

Several major coal thermal coal mines in Ukraine has to close during its conflict with Russia with vital infrastructure such as bridges and roads also affected, making it challenging for coal to be delivered to power plants in the country.

“There is a domestic shortage for all types of coal in Ukraine especially anthracite,” a physical coal trader said.

At the beginning of September, the Ukrainian government signed a tender for supply of 1m tonnes of South Africa coal ( see CSD 4 September 2014 ).

However, since news of the 1m tonne government tender, no further deals between Ukrainian buyers and South African producers were heard, market participants said.

Physical coal traders said it has become extremely difficult to source coal from South Africa because most of the lower quality South African coal is used for domestic electricity production and is not offered into the international market.

Ukraine has been forced to source low-calorific coal from Russia to boost low stocks due to its close geographical proximity and access to low volatile coal ( see CSD 17 September 2014 ).

“People in the market prefer to buy from Russia rather than South Africa since its closer and not as expensive. Russia is definitely the market of choice for Ukraine,” a second physical coal trader said.

Traders are uncertain how long Ukraine will remain a net importer and whether the tensions with Russia will curb coal supply in the future. Stacy Irish