The ban on imports of Russian coal negatively affects the EU steel industry

The bulk of Russian exports are thermal coal used in power plants, but Russia also supplies metallurgical coal used in steelmaking blast furnaces.

The impact on the hard coal market is expected to be less than on thermal coal, Morgan Stanley said in a note.

Last year, Russia shipped 32 million tons of hard coal to Europe, which is about 17% of European imports, the report says.
“Given the smaller export market for hard coal and its higher cost compared to thermal coal, it should be easier to achieve a complete redirection of trade flows,” Morgan Stanley added.

Salzgitter AG, Germany's second largest steel producer, said it does not buy coking coal from Russia and very little PCI (Pulverized Coal Injection) material that came from Russia has been replaced. “Thus, stopping imports will not affect us in any way,” the company said.

The British arm of Indian steelmaker Tata Steel Limited said it had suspended further coal shipments from Russia. The company has sufficient stocks of raw materials at its Port Talbot steel plant and has identified alternative sources of coal. “At this time, we do not expect any disruption to our ability to produce steel for customers,” it said in a statement.

The European division has suspended outstanding coal orders from Russia for the coming months and has begun purchasing alternative sources.