No coal exports from Russia will result in massive deficit for 1-2 yrs: Wood Mackenzie

He said, “We should be able to augment our production to a much higher level, but that will happen only after the commercial miners come to production, which may take 2-3 years’ time from now.”

Meanwhile, Griffin explained that without coal exports from Russia, there will be a massive deficit for the next 1-2 years. He explained that the current risk premium of coking coal is around USD 200-250 per tonne. He expects hard coking coal prices to hover around USD 350-400 per tonne levels.

“Over the course of the year, no matter what happens, we will probably see the risk premium drop. If there is no conclusion, you could very easily see prices stay where they are but I would expect that the risk premium would start to drop, but I am going to throw a number of USD 150-200 of risk premium. We are still looking at the price that would average USD 370-400 – that’s the sort of number that’s possible for the remainder of this year,” Griffin said.

Elaborating on the coal situation, he mentioned that it is very distressing even though there are no direct sanctions on coal. He added that Russian supplies account for around 15 percent of thermal coal sales. However, he pegs Indian steelmakers in an advantageous position because iron ore is more accessible here.

For the entire discussion, watch the accompanying video