The recent US sanctions targeting Russia's payment system, financial institutions, and energy production, and specifically top coal exporters SUEK and Mechel, have sent ripples of uncertainty through the Indian coking coal market, Kallanish notes.

Following the Russian invasion of Ukraine, Russia emerged as a key coal supplier to India, ranking third in coking coal and PCI supply sources in 2023. Indian customs data show Russia-origin imports of 5.5 million tonnes last year, followed by 1.25mt in the first two months of 2024.

Indian steel industry sources suggest uncertainty regarding the impact of sanctions on coking coal purchases from Russia. However, the effects may emerge in around two months due to the lead times between the two countries.

A manufacturer source, speaking anonymously, states: "The lower cost of Russian coal has given Indian manufacturers a margin advantage amid volatile steel demand and prices in the past two years. However, with new sanctions, buyers may hesitate to directly purchase Russian cargo."

On the other hand, a trader remarks: “Due to the influx of cheaper Chinese steel imports and bearish market sentiment, buyers will explore alternative methods to procure Russian coal, aiming to save costs."

India consumes about 70m t/year of coking coal, with imports comprising roughly 85% of the total demand.

Despite Australia's continued dominance as a supplier, accounting for 60% of shipments – albeit down from 75% five years ago – India is increasingly looking to Russia and the US for alternative supply sources.

In December 2023, reports emerged of India's plan to establish a consortium of state-owned firms to help steel companies facing coking coal shortages, as leading firms sought government assistance due to dwindling supplies and increasing prices.