Russian coal export crisis: Economic decline and social instability loom
The Russian economy is facing a rapid decline, as coal exports—one of the last pillars of the Kremlin's natural resource budget—plummeted by tens of percent in March. The economic collapse in Russia's coal industry is becoming increasingly apparent, with statistics from March revealing the catastrophic scale of the export drop. According to the Institute of Energy and Finance, coal shipments via major ports have significantly decreased, down 30% at Ust-Luga and 21% at Nakhodka and Vostochny compared to March last year.
The reason? Record-low global prices for thermal coal, now trading at $63-66 per ton—a level not seen since June 2024. This price point has fallen below the break-even threshold for most Russian producers. As Alexander Titov, an expert at the institute, pointed out, only companies with their own logistical infrastructure may survive. Others are left with no choice but to exit the market.
In a striking sign of collapse, companies "Russian Coal" and KTK decided to fully stop exports in April, focusing solely on the domestic market. While internal demand may stave off immediate losses, it won't be enough to sustain the industry in the long run.
According to analyst Anatoly Nesmiyan, the Russian coal industry is mired in a systemic crisis. "Europe was the key market in 2019-2020, but now that market is gone, obliterated by Russian policies," he highlights. Export revenues have disappeared, and the domestic market cannot make up for these losses.
"The Russian coal industry is predictably headed toward collapse, or at least a substantial reduction, as the domestic market won't replace the lost export volumes," he writes. The social implications are particularly alarming: Most coal enterprises are city-forming, meaning the collapse will lead to economic paralysis, mass unemployment, and social instability in entire regions.
On the external front, the outlook is bleak. Increased share of renewable energy sources in Europe and declining demand for steel in China are putting additional pressure on the market. The slogan of "turning to the East" has truly lost its meaning; the rail infrastructure is already stretched too thin to facilitate expanded exports to Asia.
Russia's self-inflicted destruction of the European market is now coming home to roost—key sectors are buckling, and company towns reliant on mines are teetering on the brink of social catastrophe.