The lignite (brown coal) power plant complex of German energy supplier and utility RWE is reflected in a large puddle in Neurath, northwest of Cologne, Germany, February 5, 2020. REUTERS/ Wolfgang Rattay/

LONDON, April 6 (Reuters) – European buyers are increasing coal shipments from around the world amid the European Union’s proposed ban on Russian imports and a scramble to relieve gas supplies, according to data and maritime sources.

The European Commission on Tuesday proposed new sanctions against Moscow for its invasion of Ukraine, including a ban on buying Russian coal and barring Russian ships from entering EU ports. Read more

The new restrictions come at a time of uncertainty over future gas deliveries from Russia to the EU later this month after the Kremlin demanded that buyers start paying Russian gas giant Gazprom (GAZP.MM) in rubles.

In March, European countries imported a total of 7.1 million tonnes of thermal coal, which is used in power and heat generation, a 40.5% year-on-year increase and the highest level since March 2019, analysis by ship broker Braemar ACM, based on ship tracking data, found.

“Although Russian coal shipments to Europe in March continued at pre-war levels, the expected shift in coal flows to Europe has begun to manifest itself,” said analyst Mark Nugent. dry bulk at Braemar.

“Shipments from Colombia and the United States were significant in response to the conflict with Atlantic suppliers offering the most profitable alternative for European end users.”

The EU depends on Russia for around 45% of its coal imports, 45% of its gas imports and around 25% of its oil imports, according to the European Commission’s website.

Braemar data showed that 3.5 million tonnes of Russian thermal coal were imported into the EU in March, the highest monthly total since October 2020.

On a weekly basis, from March 28 to April 1, Russian thermal coal imports reached the highest levels since the start of the February 24 invasion, with 887,000 tonnes of Russian thermal coal imported into the EU, according to Braemar.

German coal importer group VDKi said on Wednesday the country should be able to find alternatives to Russian coal imports by the peak of the winter season, but there will be technical problems and an increase costs. Read more

Thermal coal imports from Colombia totaled 1.3 million tonnes in March, up 47.3% year-on-year, according to Braemar data.

Imports from the United States in March totaled 809,000 tonnes, up 30.3% year-on-year and the highest level since October 2019.

Imports from South Africa also picked up with 287,000 tonnes arriving in March compared to no shipments in March last year.

Australia has also seen renewed interest from European buyers, with thermal coal imports totaling 537,000 tonnes in the first quarter of this year, compared to no shipments in the same period of 2021, Braemar said.

But Indonesia and Australia, among the world’s top coal exporters, have reached their production limits and are unlikely to meet European demand for additional supplies if the European Union bans imports of Russian coal, said mining executives. Read more

“There is greater concern about the risks associated with the Russian coal trade (due to broader sanctions), which is already impacting shipments,” said a maritime source familiar with the trade.

Although it is still more expensive to burn gas to generate electricity than coal, the price of thermal – which is used for heating and electricity generation – has reached historic highs this year.

Alex Stuart-Grumbar, dry bulk analyst at shipping consultancy MSI, said Europe’s need to import more coal from more distant sources would be positive for the larger panamax shipping segments and capesize on long-haul coal trade routes.

“The initial disruption to business patterns will be positive for dry bulk markets, although ultimately it will drive up global coal prices, prompting China and India to produce more coal domestically” , said Stuart-Grumbar.

(This story has been reclassified to correct the name in paragraph 19.)

Reporting by Jonathan Saul; Additional reporting by Nina Chestney; Editing by Veronica Brown and David Evans

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