Coal exports from Russia have been effectively halted due to the ban that the European Union has placed on Russian shipments. This ban extends to the servicing of shipments of Russian coal by any of the Union’s 27 member states. Furthermore, it has become increasingly difficult for Russian shipowners to obtain insurance coverage, with the market being dominated by EU, UK, and Swiss companies.
The EU ban, which came into effect on August 10, also prevents EU operators from providing auxiliary services such as financing to Russian coal suppliers and other shipments originating in Russia.
Although Russian coal exporters largely redirected shipments to Asia in an attempt to avoid the effects of the impending ban before it came into force, they continued to insure and reinsure their shipments with EU providers, whom they are no longer capable of relying on. These exporters will likely incur time-based and financial costs as they seek new insurance providers to work with.
With Russia controlling about 17% of global shipments, coal supplies are expected to be placed in jeopardy, particularly with an array of countries relying on Russian coal. Dmitry Smolin, an analyst at Sinara Investment Bank, expects that this will lead to a global price increase for coal as well as alternative energy sources such as LNG.