Russian coal prices jump 12% as China closes mines after accident

The price of Russian coal from the Kuzbass basin has surged by 12%, driven by mine closures in China following a fatal gas explosion that killed over 80 people in a mine in Shanxi province.

The price hike was observed in Russian coal offered at Russian Far East ports, where it increased by 12% in the last week of May, reaching $149 per ton. Pulverized coal prices also rose by 5.4% to $136 per ton. The accident at the Liushenyu mine in mid-May triggered a wave of closures and inspections of mining facilities across China.

According to a report from the Russian Price Agency, 113 coal mines suspended operations, removing a combined production capacity of 125 million tons of coal annually from the market, approximately 10% of China's national output. Furthermore, Beijing increased its imports of coking coal by 27% year-on-year in April, reaching 11.3 million tons.

Experts consulted by the Russian newspaper Kommersant suggest that Russian coal prices could rise another 5% to 10% due to the supply shortage. However, future growth potential depends on the stability of shipments from other exporters. Analysts are skeptical that high prices will be sustained long enough to motivate suppliers to increase production significantly.

The Russian coal industry faced its worst period last year and has yet to recover from the crisis caused by the closure of its trade with the European Union and sanctions imposed following the start of the war in Ukraine in 2022. The Russian government was forced to allocate 37.7 billion rubles ($480 million) last year to support the sector through tax exemptions and payment deferrals for 130 companies. Meanwhile, the Chinese market accounted for 45% of Russian coal sales between 2023 and 2024.