The Transporter. Where coal supplies to Ukraine came from over the past 5 years and how much did it cost?

Kosatka.Media traced all the routes of coal supplies to Ukraine over the past 5 years and found out how much the price depends on the path distance.

Kosatka.Media traced all the routes of coal supplies to Ukraine over the past 5 years and found out how much the price depends on the path distance.

October has arrived, as always unexpectedly. The heating season is typically an additional stress. And if you don’t really have to worry about gas this winter – the storage facilities are full according to the plan – then the news about coal reserves throughout September was much sadder.

As of October 2, according to the website of the Ministry of Energy and Coal Mining, 1 million 207.2 thousand tons of coal are stored in TPPs warehouses. The website notes that compared to the “planned volumes”, the actual reserves are 419.5 thousand tons higher.

In early September, it was reported that the volumes of coal reserves are 2 times lower in the warehouses of TPPs and CHPPs, compared to last year's ones. As of September 9, the total reserves amounted to a little over 932 thousand tons, while there were almost 2 million tons of coal in warehouses a year ago.

Interesting that last week Chairman of the Independent Trade Union of Miners of Ukraine and MP Mykhailo Volynets called the situation with filling the warehouses of thermal power plants shortly before the winter as unsatisfactory (and stopping the supply of coal from Russia through Belarus was a step towards re-qualifying the situation as “catastrophic”).


“Moreover, this level is lower than in December 2014 (953 thousand tons), when coal supplies from Donbas were blocked due to the outbreak of military conflict in the east of Ukraine, and heat generation was not ready for this at all”, Head of NPC Ukrenergo Vsevolod Kovalchuk noted in his article to Dzerkalo Tyzhnya. “Five years have passed since the start of hostilities and disruptions in coal supplies. Part of the TPPs’ units were switched to gas-coal, the price of electricity for thermal generation has been formed according to the notorious Rotterdam+ formula for almost four years in a row based on the price in the ports of the Netherlands to quickly arrange purchases of imported coal... But despite all these circumstances on the verge of the heating season there’s still no coal in the warehouses of TPPs anyway”, he said.

The volume of reserves has begun to increase since September 9, but their growth is not very encouraging. So, as of the morning of September 17, 1 million 51 thousand tons of coal (anthracite – 340.8 thousand tons, gas-coal – 710.5 thousand tons) are stored in the warehouses of TPPs and CHPPs. The increase for a little more than a week amounted to 119.2 thousand tons (+ 11.3%). At the same time, on September 19, DTEK announced that they had increased coal volumes in warehouses by 57%.

Prior to this, in early September, DTEK had announced a public auction for the purchase of coal on the Ukrainian Energy Exchange. Auctions were held from September 3 to 12. But the results were not achievable.

“The absence of concluded agreements reflects the unreadiness of traders to supply coal at such a high price”, the press service of the energy holding emphasized.

It was planned to purchase coal in eight lots of 75 thousand tons for Ladyzhinska, Kryvorizhska, Zaporizhska, Prydniprovska, Burshtynska, Dobrotvorska thermal power plants (TPPs). The price of coal was in the range of 1.867 - 1.966 UAH/ton, depending on the location of the thermal power plant. The cost was formed on the basis of API2 quotation (Rotterdam+) as of August 30, 2019 + freight, transshipment at the port, railway tariff from the port/border of Ukraine to the TPP.

Coal purchases on the exchange had to become an additional tool for the company to provide its own TPPs with the resource for the autumn-winter period, DTEK noted. They also added that the holding continues regular coal supplies from Colombia, the USA, and South Africa. And although the price of this coal is higher than the cost of fuel based on API2 with delivery, it will become the basis for filling the warehouses of the thermal power plants of the holding in the coming months.

In mid-August, Colombian coal has been supplied to Ukraine for the first time –the first batch was for DTEK. Then, the General Director of the company said that the energy holding contracted the import of 300 thousand tons of Colombian coal of G grade and 100 thousand tons of anthracite. In general, according to him, the holding needs about 1 million tons of coal by the end of the year (taking into account these 400 thousand tons). On September 5, a second batch of gas coal arrived from Colombia for DTEK.

Over the past 5 years, Ukraine has greatly expanded the geography of coal imports – from stable supplies from the Russian Federation to outbreaks from Indonesia and even Peru. Kosatka.Media traced all the routes of coal supplies to Ukraine and found out how much the price depends on the path distance.

 


LONG (and not so long) VOYAGE ANTHRACITE

As it is known, in May 2016, Ukrainian power plants were aggressively switched to gas-coal – as anthracite mines in Donbas were lost. The transition on the one hand was explained by the fact that the remaining mines in Ukraine produce gas-coal. And on the other hand, the fact that there is not enough anthracite in the world, and it is much easier to find coal of G grade for import (as own production is not enough). To date, anthracite can be found in the warehouses of only 3 TPPs – Slavyanska (which is partially switched to gas due to lack of anthracite), Kryvorizhska and Trypilska (where grade A is burned only at 1 unit).

According to ex-head of the ex-Ministry of Energy and Coal Mining Ihor Nasalik, for the period 2016 - 2018, Ukraine reduced its consumption of anthracite by 2.7 times – “thanks to the transfer of blocks of thermal power plants (TPPs) to the use of coal from the gas group”. 10.5 million tons were consumed in 2016, in 2018 – 3.9 million tons of anthracite coal.

Overseas deliveries were used to cover declining volumes of anthracite consumption – therefore, import volumes on the contrary increased (almost by 4 times from 2016 to 2018).

In 2015, Ukraine purchased anthracite in the amount of 1 million 74 thousand tons, and paid $99.6 million for it. In 2016, slightly less was purchased – 993 thousand tons of anthracite (for $68.66 million), in 2017, when DTEK finally lost control of the mine departments in Donbas – 3.38 million tons were imported, with a total value of $330.8 million. In 2018, the volume of imported anthracite increased slightly again – up to 3.87 million tons with a total value of $411.98 million. 2.21 million tons ($ 244.34 million) of anthracite have been imported for half of 2019.

Where did anthracite come from

Over the past 5 years, anthracite (in significant volumes) was supplied to Ukraine mainly from Russia and South Africa. But there were more exotic destinations, albeit in small volumes. At the same time, the path distance of coal did not always determine the price of a resource.

For example, roughly speaking, at the beginning of the problem in 2015, 880.5 thousand tons of anthracite were imported from the Russian Federation. Its total cost amounted to $80.76 million. In the same year, 193.5 thousand tons of A grade coal were imported from South Africa. It was 19% more expensive than the Russian one (for the first and last time). $18.6 million was paid for this small amount of coal – the price of 1 ton was $96.24. South Africa became the second key “anthracite trader” for Ukraine until 2018.

          

Shipments from Russia fell to 566.7 thousand tons in 2016, but from South Africa, on the contrary, rose to 366.6 thousand tons (+ 89%). At the same time, the price of Russian coal was higher than that delivered through tens of thousands of kilometers from Africa. Anthracite from Russia cost $80.76 per ton, while from South Africa – $62.4. It is 29% more expensive.

It is also interesting that Ukraine not only imported, but also exported coal in 2016, in particular anthracite. 178.5 thousand tons were shipped to Moldova, Poland, Turkey and other countries. In the following years, exports broke even.

Over the next two years, anthracite imports grew from both the Russian Federation and South Africa. 2.66 million tons were imported from Russia in 2017, which is 4.7 times more than a year earlier. At an average price per ton of $99.6. 3.624 million tons for $106.9 per ton was in 2018. This is already 6.4 times more than in 2016. We remember that the Ministry of Energy stated that the consumption of A grade coal for the same period decreased by 2.7 times. The total cost of Russian anthracite purchased in 2017-2018 amounted to $652.5 million.

The deliveries from the Republic of South Africa increased to 714 thousand tons in 2017with an average price of $92 per ton (8% cheaper than from Russia). The growth was 94% compared to the previous year. At the same time, already in 2018, volumes from South Africa fell almost to the level of 2015 – up to 235.35 thousand tons, and the price increased slightly – up to $99.89 per ton. But it was still cheaper than anthracite from the Russian Federation by 7%.

In 2019, deliveries from the Russian Federation did not particularly decrease – in the first six months Ukraine has already purchased 2.143 million tons of anthracite with a total value of $235.3 million. 1 ton on average cost of $109.8. There are practically no supplies from the Republic of South Africa – they delivered 845 tons worth $79.3 thousand (1 ton – $93.8).

For 5 years (2015 - the first half of 2019), about 9.9 million tons of anthracite were brought to Ukraine from the Russian Federation with a total value of $1 billion 14 million. About 1.5 million tons of anthracite with a total value of $141.8 million were imported from the Republic of South Africa during the same period.

Anthracite also was delivered from Europe during this period, but in very small quantities. Of particular note is Bulgaria, which in 2017 stoically delivered 412 tons of coal to Ukraine (at a price of $122 per ton), or Spain, which for the first half of 2019 delivered 66 million tons of anthracite at $135.9 per ton (total cost - $8.99 million).

At the same time, the farthest import of anthracite in 2015 - 2019 was not even from South Africa. In 2015, Ukraine purchased the most "long-voyage" coal in history - in Peru. The distance from port to port was 20.778 km. It was also the most expensive. The volume of supply was 705.5 tons, for which $171 thousand was paid. So, $242 per 1 ton.

DTEK does not disclose coal prices from Colombia, but the distance to the port is almost 11.000 km.

 


FOREIGN NON-ANTHRACITE

The geography of G grade coal supplies are  great wider. And the volumes are much higher.

Import of gas-coal, and accordingly, the volume of funds paid for it, from 2015 to 2018 were rapidly growing. The number of imported tons increased by 22.8%, and financial costs - by 41.6%.

In 2015, the supply of coal without anthracite amounted to 13 million 523 thousand tons. The total cost of deliveries amounted to $1 billion 532 million. In 2016, 8% more was delivered - 14 million 714 thousand tons, but cheaper (also by 8%) - the total cost was $1 billion 396 million. In 2017, the volume of imported coal reached 16 million 402 thousand tons (+ 10.3%), for which $2 billion 413 million was paid. And this is 42% more expensive than a year earlier. In 2018, 17 million 517 tons (+ 6%) were imported with a total value of $2 billion 624 million (+ 8%). For the first six months of 2019, 8 million 369 thousand tons of coal were imported excluding anthracite, with a total value of 1 million 232.6 thousand tons.

Major suppliers

During the period under review, there was a “backbone” of countries that supplied coal regularly, in various volumes. First of all, these are the Russian Federation, USA, Canada, Kazakhstan, etc.


Russia was the main supplier of non-anthracite coal (nothing unexpected). In 2015, 7 million 45 thousand tons were imported from Russia with a total value of $692.98 million. So, one ton cost $93. 

The next year, 2016, coal supplies rose to 9 million 871 thousand tons (+ 28%). But the cost of one ton of coal has fallen in price - to $87 (by 6.5%). The total value of this import volume amounted to $906 million. In the next two years, both supply volumes and coal prices increased. So, in 2017, one ton of gas-coal from the Russian Federation cost $121, which is 28% more expensive. Over the year, 10.6 million tons of coal were imported (+ 6.9%) with a total value of $1.29 billion. In 2018, one ton of coal became expensive by another $5 (+ 3.97%), and the supply volume increased to 11.4 million tons (+ 7%). The total value of imports amounted to $1.43 billion.

According to data for the first half of 2019, the price of coal fell slightly. 5.84 million tons of coal were imported from Russia with a total value of $686.3 million. The price of one ton is $117.6.


The United States was second in terms of supply.

In 2015, 2.805 million tons were delivered from the USA to Ukraine with a total value of $363.4 million. The cost of one ton was $140. This is 33.5% higher than the cost of supplies of Russian coal in the same year.

Next year, both volumes and prices fell (by 1 million tons, or 35%) - one ton of coal cost $116.6 (cheaper by 16.7%). In 2016, Americans shipped 1.8 million tons of coal to Ukraine with a total value of $211 million. In 2017 (the same as with deliveries from the Russian Federation), the cost of one ton of coal from the USA increased significantly - up to $200 (this is 41% more expensive) . In general, 3.4 million tons of gas-coal (+47%) were delivered over the year with a total value of $681.9 million. In 2018, the price of supplying 1 ton of coal from the United States fell to $194 (3%). At this price, 4.68 million tons of coal worth $907.2 million were delivered.

According to the data for the first half of 2019, 2.13 million tons of coal worth $496 million, or $220.5 per ton (+ 12% to last year's price)were delivered.


Canada

Canada in 2015 delivered to Ukraine 884.5 thousand coal with a total value of $113.64 million. The price of one ton was $77.8. This is 55% cheaper than supplies from the United States, and even 17% cheaper than 1 ton of coal from Russia in the same year. But then prices went up rapidly and by 2018 rose by 63%.

In 2016, the cost of one ton of coal brought from Canada was $112. In total, 842 thousand tons of coal were brought to Ukraine from this country in 2016. Its total cost amounted to $94.4 million.

The following year, one ton of coal cost another 44% more - $200.5 (compared to the cost of supplies from the United States). 908 thousand tons of coal arrived from Canada to Ukraine, which cost $182.2 million. American coal fell in price somewhat in 2018, but Canada did not stop there and raised the average price per ton of coal to $212.7. The volume of coal supplies at this price amounted to 764.26 thousand tons (15.8% less). The total cost of supplies was $165.55 million.

Supplies from Canada for the first six months of 2019 were not carried out.


Kazakhstan

In 2015, 839.5 thousand tons of coal were delivered from Kazakhstan with a total value of $128.1 million. One ton cost an average of $152. This is more expensive than from the Russian Federation (by 38.8%), from the USA (by 7.9%) and from Canada (by 49.3%) in the same year.

Next year, the level of supply fell markedly, as did the price. Kazakhstan delivered 551.25 thousand tons of gas-coal, which is 34.3% less than a year earlier. The cost of deliveries amounted to $75.6 million. So, one ton was bought for $137.

In 2017, supplies decreased even more, and prices, on the contrary, increased (which is in line with the trend of all other supplier countries to Ukraine). So, 408.5 thousand tons were delivered from Kazakhstan (25.9% less than in the previous year) with a total cost of $78.5 million. One ton cost $182.3 (24.9% more expensive). The following year, supply volumes increased slightly to 421.5 thousand tons, and the price fell - $167 per ton. The total value of imports amounted to $70.4 million. For six months of 2019, 337 thousand tons were imported from Kazakhstan for $62.3 million. The price of one ton was $ 184.7.


Australia

While most of the supplying countries increased their import volumes from 2015 to 2018, Australia, on the contrary, decreased. The maximum occurred in 2015, when the volume of deliveries from Australia amounted to 952.5 thousand tons with a total value of $122.5 million. One ton on average cost $128.5. It is cheaper than Kazakh and American coal, but more expensive than Russian and Canadian.

The following year, shipments from Australia fell to 724.8 thousand tons of coal, and the price fell to $109.2 per ton. The total value of Australian supplies in 2016 amounted to $79.1 million. In 2017, the price of coal increased markedly to $214.6 per ton (by 40%), and the supply volume decreased by 25%. In general, 542.5 thousand tons of coal with a total value of $116.4 million were delivered during the year.

In 2018, supply volumes decreased to 181.96 thousand tons (by 66.5%), for which $35.7 million was paid. The price of one ton rose again - up to $196 per ton.

In general, from 2015 to 2018, shipments from Australia fell by 80.9%. For the first half of 2019, supplies from Australia shrank to 69.8 thousand tons. And they went up again - $14.9 million was paid for this volume - $214.6 per ton (+8.6%).


Poland 

Poland was not the most “productive” in terms of supply volumes. But it stably supplied its product to the Ukrainian market (Poland has a lot of brown coal, which it  burn, but our thermal power plants are not adapted for it).

In 2015, 203.2 thousand tons were imported from Poland with a total value of $29.137 million. On average, one ton cost $143.4. Coal turned out to be more expensive than supplies from the USA, Russia, Canada and Australia.

The following year, the cost of one ton of coal decreased to $101 (by 29.6%). At this price, 511 thousand tons of coal were delivered (60% more), $51.7 million was paid. In 2017, supplies decreased slightly to 443.6 thousand tons, and the price went up - one ton of Polish coal cost $127.65. The total value of Polish supplies amounted to $56.63 million. Coal price from Poland in 2018 rose again - up to $139.9 per ton. And the supply volumes decreased by 83% compared to the previous year - to 74.8 thousand tons of coal (with a total value of $10.47 million).

For the first half of 2019, only 278 tons of coal were delivered from Poland.


Unexpected "dealers"

In the history of importing gas grades of coal there are unexpected suppliers, or participants in a one-time action. These include Spain. In 2015, 30.83 thousand tons of coal were purchased from Spain with a total value of $2.74 million. On average, one ton cost $88.36 (which is cheaper than all offers this year, except Canadian). And in 2017, Indonesia became such a “coal dealer”. Over the year, 77 thousand tons of coal (one batch by sea) were imported from Indonesia with a total cost of $11.13 million. One ton of coal cost $144.5, and this was cheaper than supplies from the USA, Canada, Australia and Kazakhstan.

In the same 2017, the “hungry for gas-coal” year, the Czech Republic joined the more or less noticeable suppliers. Its support cost us $3.16 million. A little more than 18 thousand tons of coal was delivered for this money. $174 per ton.

Another, no less interesting story arose with supplies from Belarus, which does not mine coal at all. But re-exports it. So, if in 2017, 600 tons of coal were delivered from Belarus to Ukraine, then in 2018, supplies increased to 588.5 thousand tons. We were the main consumer of coal from Belarus. At the same time, in the official data of the State Statistics Service for 2018 there is no mention of Belarus as a coal supplier, albeit Russian.

We remember that last week it became known that Russia stopped the supply of coal through Belarus. 300-400 thousand tons of Russian coal were delivered monthly through Belarus.


TOTAL

Country

Distance (from port to port)

Average price $/ton

Total supplies volume, ton

Cost, $

Russia

26 - 3850 km

$103,79

54 mln 605 th.

6 bln21 mln 

USA

8180 km

$174,22

14 mln 825 th.

2 bln659 mln 

Canada

9150 km

$150,75

3 mln 398 th.

555 mln 790 th.

RSA

11892 km

$88,87

1 mln 509 th.

131 mln 750 th.

Kazakhstan

3100 km

$144,6

2 mln 557 th.

537 mln 300 th.

Australia

13700 km

$172,58

2 mln 471 th.

368 mln 600 th.

Poland

900 km

$127,98

1 mln 232 th.

147 mln 937 th.

Spain

2864 km

$112,13

96 830

11 mln 640 th.

Czech Republic

988 km

$174

18 000

3 mln 160 th.

Indonesia

9672 km

$144,5

77 000

11 mln 130 th.

Bulgaria

445 km

$112

412

51,3 th.

Peru

20700 km

$242

705

171 th.

 

Judging by coal prices over the past 5 years, the cost does not always depend on the path distance of supplies. Supplies from “transshipment” countries (Bulgaria, Czech Republic, etc.) may be more expensive than supplies from countries where coal is mined (Russia, South Africa). The price of imports is influenced more by trends in the global market, rather than our soaring demand for coal in 2017 - 2018. It still cannot but rejoice.

The ministry’s not entirely understandable approach to coal reserves this year is not joyful. "Actual" volumes of coal in warehouses are significantly lower than last year, but at the same time, they are more than "planned", as stated in the Ministry of Energy. And this is in conditions when the power unit of Khmelnytska NPP unplanned fell out of the power system, and which was supposed to be compensated by coal generation. This was stated by Head of the Department Olexiy Orzhel, assuming the post. Now, there is every opportunity to cover the shortage of generation through open imports from the Russian Federation. But no one spoke of such an option in early September. And now the lack of the necessary amount of coal in warehouses, just might be an argument in favor of imports from Russia, which, for obvious reasons, has many opponents.

 

Kosatka.media

Tags: DTEK, coal, TPP, import

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