EU’s new Russia sanctions could disrupt Kazakh coal exports

The EU’s new sanctions on Russian ports may disrupt Kazakh coal exports, boosting demand for Colombian, South African and US coal while traders await clarity on exemptions.

Uncertainty over the European Commission’s recent sanctions on Russian ports, including key coal exports ports of Ust-Luga and Novorossiysk may drive demand for alternative coal supply in the Atlantic basin.

The EU imposed sanctions on Russian infrastructure this week, targeting key coal export ports Ust-Luga and Novorossiysk. These ports supply Kazakh coal to the EU and Morocco, as well as Russian coal to other non-EU buyers.

The EU has not clarified whether non-oil and non-Russian products are exempt, creating uncertainty for traders handling Kazakh coal. This could disrupt trade flows as suppliers await further guidance on EU-bound shipments, while Morocco’s stance on the situation remains uncertain.

The main buyers of coal exported from Russian ports, China, India and Turkey, are not expected to reduce their imports after the latest wave of sanctions.

Coal shipments to the EU from Russian ports (Russian & Kazakh origin) Mt

Source: Kpler

The EU and Morocco are the primary buyers of Kazakh coal shipped from Russian ports, importing approximately 1.8Mt and 800,000t in 2024, respectively.

European buyers’ imports of Kazakh coal have ranged between 5-6Mt in recent years. Kpler data indicates that around 3Mt arrived via seaborne trade, while the remainder was transported overland, primarily to Poland.

Ust-Luga & Novorossiysk coal exports to Morocco & EU (‘000t)

Source: Kpler

Morocco emerges as new market for Kazakh coal after the war

Morocco became an export market for Kazakh coal after the Russia-Ukraine war in 2022, as Moroccan banks, fearing US sanctions, halted Russian coal imports despite Morocco itself imposing no restrictions.

To compensate for lost Russian supply, which was a major part of its energy mix, Morocco turned to Kazakh coal. However, it remains uncertain whether these imports will continue from sanctioned Russian ports.

Around 810,000t of coal was shipped from Russian ports into Morocco last year, nearly all of it was Kazakh supply shipped from Ust-Luga. At the time of reporting, two vessels, the Panamax Ag Saturn and Panamax Zheng Fan, were heading towards Morocco, likely carrying Kazakh coal. These vessels are expected to arrive at Jorf Lasfar port over 9-15 March.  

Coal shipments to Morocco from Russian ports (Russian & Kazakh origin) (‘000t)

Source: Kpler

Additional demand of 2-3Mt/year for other suppliers in the Atlantic basin

The sanctions on Ust-Luga and Novorossiysk ports does not necessarily mean a halt in Kazakh volumes, as shipments could be shifted to alternative ports. Taman could absorb some of the displaced volumes from Ust-Luga and Novorossiysk, though longer shipping times and additional costs from transiting the Bosphorus, Dardanelles Strait could increase voyage expenses and reduce Kazakh supply’s competitiveness against competing origins.  

A potential consequence of reduced Kazakh coal imports could be increased demand for coal covered by standardised coal agreements (Scota), which do not include Kazakh coal.

European coal benchmarks now reflect prices of Colombian, Australian, Polish, South African, and US supply, after Russian coal was removed due to sanctions.

Although a reduction in Kazakh volumes could temporarily support European coal prices, a supply shortage is unlikely given there is enough coal availability to offset the potential decline.

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