Indian companies swapping dollar for Asian currencies to buy Russian coal

JK Lakshmi Cement

11/08/2022 24:30

(Repeats earlier story for wider readership with no change to
text)
    * India has ramped up imports of Russian coal since Ukraine
war
    * June customs data shows non-dollar payments now common
    * Chinese yuan, Emirati dirham trades becoming more popular
    * Banks and traders seek to avoid dollar, wary of sanctions

    By Sudarshan Varadhan
    NEW DELHI, Aug 10 (Reuters) - Indian companies are using
Asian currencies more often to pay for Russian coal imports,
according to customs documents and industry sources, avoiding
the U.S. dollar and cutting the risk of breaching Western
sanctions against Moscow. 
    Reuters previously reported on a large Indian coal deal
involving the Chinese yuan, but the customs data underline how
non-dollar settlements are becoming commonplace.  urn:newsml:reuters.com:*:nL4N2YE2OM
    India has aggressively stepped up purchases of Russian oil
and coal since the war in Ukraine began, helping to cushion
Moscow from the effects of sanctions and allowing New Delhi to
secure raw materials at discounts compared to supplies from
other countries.
    Russia became India's third-largest coal supplier in July,
with imports rising by over a fifth compared with June to a
record 2.06 million tonnes.  urn:newsml:reuters.com:*:nL1N2ZG09I
    In June, Indian buyers paid for at least 742,000 tonnes of
Russian coal using currencies other than the U.S. dollar,
according to a summary of deals compiled by a trade source based
in India using customs documents and shared with Reuters, equal
to 44% of the 1.7 million of tonnes of Russian imports that
month. 

    Indian steelmakers and cement manufacturers have bought
Russian coal using the United Arab Emirates dirham, Hong Kong
dollar, yuan and euro in recent weeks, according to customs
documents separately reviewed by Reuters.
    The yuan accounted for 31% of the non-U.S. dollar payments
for Russian coal in June and the Hong Kong dollar for 28%. The
euro made up under a quarter and the Emirati dirham around
one-sixth, the data from the trade source showed.
    India's Ministry of Finance, which administers the customs
board, did not respond to emails seeking comment confirming the
documents. The Ministry of Commerce and Industry declined to
comment. 
    The Reserve Bank of India also did not respond to requests
for comment.  
    The RBI has approved payments for commodities in the Indian
rupee, a move it expects to boost bilateral trade with Russia in
its own currency.  urn:newsml:reuters.com:*:nL1N2YT08J
    The U.S. dollar has been the dominant currency for Indian
commodity imports, traders said, and the greenback makes up most
of the country's foreign exchange reserves.
    For deals in a currency other than the dollar, lenders would
potentially have to send dollars to bank branches in the country
of the original currency, or banks they have tie-ups with, in
exchange for that currency to settle the trade.  urn:newsml:reuters.com:*:nL4N2YN1ZD
    
    KEEPING DOLLAR AT A DISTANCE
    Two traders based in India that purchase coal for domestic
customers and a trader based in Europe that deals with Russian
coal said they expected the share of non-dollar transactions for
Russian coal to increase as banks and other parties explore ways
of cushioning themselves against any further tightening of
sanctions.
    Buying Russian coal using the U.S. dollar is not illegal for
Indian firms.
    Reuters was able to corroborate customs documents for four
of the 11 vessels in the summary of Russian coal trades in June
provided by the trade source, which showed payments made using
the yuan, euro and the Emirati dirham, using shiptracking data
and by speaking to a private customs agent based in India.
    Another three vessels in the 11 deals in the trader's
summary were paid for using the Hong Kong dollar and the yuan,
two trade sources familiar with the transactions confirmed. 
    In one of those three deals, Jindal Steel and Power Ltd
(JSPL)  JNSP.NS  imported 79,721 tonnes of so-called PCI coal in
the vessel Zheng Kai from Russia's Ust-Luga port using yuan,
according to the two sources.
    Rival steelmaker Arcelormittal Nippon Steel India shipped in
35,000 tonnes of Russian anthracite coal using euros, a customs
document dated June 15 showed.
    JSPL and Arcelormittal Nippon declined to comment. 
    Non-dollar imports continued into July.
    Two Indian customs documents from last month reviewed by
Reuters showed that Indian companies agreed to pay for Russian
coal using Hong Kong dollars and Emirati dirhams.
    India's JK Lakshmi Cement  JKLC.NS  imported 10,000 tonnes
of Russian thermal coal in the bulk vessel Ada, according to a
customs document dated July 20. The invoice was valued at 14.62
million Emirati dirhams ($3.98 million), and trader Swiss
Singapore facilitated the deal.
    JK Lakshmi did not respond to calls or emails requesting a
comment. Swiss Singapore, owned by Indian conglomerate Aditya
Birla Group, did not respond to requests seeking comment. 
    Indian coal trader Chettinad Logistics imported 25,000
tonnes of Russian thermal coal from Singapore-based trader Avani
Resources and paid in Hong Kong dollars, another customs
document dated July 20 showed.
    Reuters was unable to contact Chettinad Logistics. Avani did
not respond to an email seeking comment.
    
    ($1 = 0.9764 euros)
    ($1 = 7.8497 Hong Kong dollars)
    ($1 = 3.6729 UAE dirham)

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India coal imports from Russia vs rest of World    https://tmsnrt.rs/3bG6tzd
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 (Reporting by Sudarshan Varadhan; Additional reporting by Swati
Bhat in Mumbai; Editing by Mike Collett-White and Christian
Schmollinger)
 ((Sudarshan.Varadhan@thomsonreuters.com; +919810393152;
Twitter: https://twitter.com/sudvaradhan @sudvaradhan;))