In a commodities update, Macquarie Research noted that Russian domestic demand for coking coal collapsed in the last three months of 2008.

“As a result, Russian miner Belon is reportedly offering coking coal at $US65 per tonne to domestic customers and $US100 per tonne into Asia, compared with prevailing benchmark contract prices of $US240-300 per tonne and recent spot deals at around $US140 per tonne,” Macquarie said.

A recent Reuters report confirmed that Russian coking coal producers have been hard hit, with clients from the steel sector delaying payments.

The situation forced Belon and fellow Russian producers Raspadskaya and Mechel to request government assistance back in November.

In the same month, Raspadskaya said it had only received payment for 21% of its shipments in the quarter and would only reach one-third of planned production in the period.

In Belon’s case, the company has said this week it will run at full capacity in the current quarter because of agreements with domestic steelmakers and an unnamed producer in Southeast Asia.

Any efforts by Belon to undercut coking coal prices would be supported by the decline in the Russian rouble compared to the US dollar.

Russia’s central bank has been gradually devaluing the rouble with its latest devaluation this week putting the currency to its lowest level against the US dollar since around February 2003.

One US dollar is currently worth around 31.73 roubles.

According to Macquarie, coal exports from Russia totalled 94.9 million tonnes last year, a 1.6% gain from 2007.

Last year, supply to domestic consumers jumped by 7.4% to 14.3Mt, despite the collapse towards the end of the year.

The research division of the investment bank expects infrastructure constraints and relatively high mining costs to limit Russian export growth for this year.