Turkey sharply reduced purchases of Russian raw materials

Turkey in October reduced the import of coal, oil and gas from RUSSIA by 25% compared to the previous month in monetary terms, the local statistical service reported. Russian companies received $3 for these goods,

The import of Russian mineral fuel (coal, oil and oil products, natural gas) to Turkey in October 2022 amounted to $3.71 billion, a quarter lower than in September (almost $5 billion), follows from the foreign trade data of the Turkish Institute of Statistics disclosed on November 29 ( Turkstat). In general, imports of goods from Russia to Turkey in October amounted to slightly less than $5 billion, and in January-October - almost $50 billion.

But in annual terms, the supply of coal and hydrocarbons from Russia in October increased by 2.9 times (in October 2021 it was $1.28 billion).

Turkstat does not disclose how much, individually, is accounted for by oil, coal or gas imports from Russia. "Confidential" imports from Russia in October amounted to $2.35 billion (against $3.8 billion in September), which includes imports of crude oil and pipeline gas, according to Turkstat data.

The Federal Customs Service of Russia suspended the publication of customs statistics in the spring, and now it is possible to reconstruct the structure of Russian foreign trade only on the basis of data from countries that are its trading partners.

Factors of decline in oil and gas imports

S&P Global estimated that in October Turkey, which became the third largest buyer of Russian crude after CHINA and India, reduced its imports of Russian oil by 12% in physical terms compared to September, to 345,000 barrels. in a day. Based on the data on total crude oil imports to Turkey in October (2.88 million tons - 3% less than in September), Russia provided more than 50% of Turkish oil imports last month. At the same time, according to the Finnish Center for Research on Energy and Clean Air (CREA), against the backdrop of the embargo imposed by the European Union on oil supplies from Russia, Turkey is actually becoming a hub for the re-export of oil products made from Russian oil to the EU (this is allowed by the sanctions regime).

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In general, Turkey increased physical purchases of the main Russian grade Urals, delivered by sea, by more than five times by September compared to January-February, the price agency Argus Media reported in November. Turkish companies also buy the Russian variety Siberian Light. However, further potential for increasing imports of Russian oil is limited, since Turkey normally imports about 0.6 million barrels. per day of crude oil, of which about 0.4 million is already provided by Russia, writes Morgan Stanley in a review for November 24 (RBC has it). At the end of October, the research division of the American ship broker Poten & Partners pointed to a “paradox”: the main increase in oil supplies from Russia to Turkey has recently come from remote ports of the Baltic Sea, despite the geographical proximity of the Black Sea ports.

In October 2022, the average price of Russian Urals oil was $70.6 per barrel (3.5% more than in the previous month, but 13% lower than in October last year), the Russian Finance Ministry reported.

The decrease in imports to Turkey in money terms may also be due to the fact that gas prices dropped significantly in October. If we take the average price at the European TTF hub for a month, gas lost 35% in October versus September, said Alexei Kokin, chief oil and gas sector analyst at Otkritie Investments. According to the Turkish energy regulator EPDK, the country imported 2.11 million cubic meters. m of natural gas from Russia in August (no more recent data available).

Record volumes of Turkish exports

Exports of goods from Turkey to Russia in October amounted to $1.15 billion, the same as in September. This is a record level (it is 1.9 times more than in October last year). At the same time, Russia came in fourth place among the largest destinations for Turkish exports, surpassing the UK, follows from Turkish data.

A significant amount of goods going from Turkey to Russia is re-export, French newspaper Le Monde wrote on October 24. “Cargo from various countries is unloaded at the ports of Mersin, Istanbul and Izmir, then placed in containers owned by local companies or subcontractors and sent by sea to Novorossiysk or transported by truck to Russia via Georgia,” the publication claims. “Now many European goods enter Russia through Turkey due to its geographical location,” the press service of the logistics operator Delovye Linii noted on November 21.

Historically, the largest item of Turkish EXPORT to Russia was fruit, but in 2022, deliveries of machinery and equipment increased markedly. The growth in deliveries from Turkey to Russia this year was achieved mainly “due to an increase in the volume of processed initial products for industry and capital equipment,” the Expert RA rating agency notes in an analytical report submitted on November 29.

For the second month in a row, Turkish statistics record relatively large volumes of exports to Russia of ships, boats and floating structures (group 89 of the trade nomenclature, data in more detail by Turkey are not published). Those shipments were $84.6 million in October, up from $81 million in September (compared to a monthly average of $22 million in 2021).