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Russian trade with Europe is currently limited to Hungary, except for sluggish supplies to France and a number of other countries.

Russian exports to European countries in January – February 2024 decreased to $9 billion from $18.3 billion in the same period last year, according to foreign trade data published by the Federal Customs Service. The total volume of supplies from Russia at the beginning of the year also showed negative dynamics: compared to the first months of 2023, it decreased by $5.4 billion and amounted to $58.5 billion. At the same time, according to statistics from the Central Bank, exports began to recover in March after falling at the beginning of the year. The figure approached $40 billion after $28 billion in January and $30 billion in February 2024.

Foreign Trade of Russia in January – February 2023-2024

	EXPORT in billion US$		IMPORT in billion US$
Country	2023	2024	2023	2024
Europe	18,3	9	13	10,7
Asia	41,7	45,2	27,2	28,2
Africa	2,5	2,5	0,5	0,5
America	1,4	1,7	2,6	2,1
Total	63,9	58,5	43,4	41,6

Source: Federal Custom Service

The drop in supplies from Russia to Europe in early 2024 continued the trend of last year. According to the Federal Customs Service, for the whole of 2023, exports to the countries of this region decreased by more than three times and amounted to $84.9 billion after $265.6 billion in 2022. The share of European countries in the structure of Russian exports thus amounted to 20% by the end of last year, while in 2021, according to CIACP (The Center for Macroeconomic Analysis and Short–Term Forecasting, an independent non-profit research organization) analysts, this region accounted for 51% (the contribution of the EU countries decreased from 33% to 12%).

The representative of the Federal Customs Service of Russia did not respond to Vedomosti's request, referring to the temporary suspension of the publication of expanded data on foreign trade statistics. In 2022, after the introduction of large-scale anti-Russian economic sanctions, the Customs Department closed data on foreign trade "in order to avoid incorrect estimates and speculation." Almost a year later, the Federal Customs Service partially resumed publishing statistics.

The Ministry of Energy reduced the projected export figure for the current year to $428.7 billion from $471 billion, a representative of the ministry told reporters on April 23. The expected value of supplies from Russia in 2025, according to the updated parameters, is also lower than the previous forecast – $455.7 billion instead of $481.1 billion, the figure for 2026 was $473.8 billion after $496.7 billion in the September forecast.

What Russia exports to Europe

Russian exports to Europe are almost entirely reduced to natural gas and a number of other raw materials, if you focus on the mirror statistics of the EU countries, says Alexander Isakov, chief economist at Bloomberg Economics. The oil and gas group holds almost 100% of trade with Hungary, which remains Russia's largest partner, he notes. Despite a significant reduction in exports, France, Slovakia and Spain also remain trade partners of the Russian Federation – exports here amount to about 300 million euros per month, Isakov continues. At the same time, the current sanctions regime makes data on bilateral trade uninformative, the expert notes.

The structure of supplies from Russia to Europe is changing due to a decrease in the share of mineral fuels in it, Elena Akhmedova, the author of the Telegram channel "Solid Figures", told Vedomosti. In 2023, it decreased to 64.5% from 80.1% a year earlier and 70.4% in 2021, she explains. In February 2024, it was equal to 62.3%. According to the expert, the share of metals in total exports in 2023 amounted to 14.6% against 5.9% in 2022 and 8.1% in 2021. The share of fertilizers reached 3.3% (in previous years it was less than 1.5%).

Why are exports declining?

The reduction in export revenue is due to falling prices, in particular for pipeline gas, according to Kirill Rodionov, an energy expert. According to ENTSOG, Gazprom's supplies to EU countries in the first quarter of 2024 increased by 70% compared to the same period in 2023, reaching 80 million cubic meters per day (against 47 cubic meters per day in January – March 2023, excluding transit supplies to Serbia and Northern Macedonia), the expert explains. At the same time, the average gas price at Europe's largest TTF (The Title Transfer Facility) hub in the first quarter of 2024 was almost twice lower than in the first quarter of 2023 ($313 versus $603 per 1,000 cubic meters). Since Gazprom's contracts take into account current prices, this could not but lead to losses in export revenue, Rodionov is sure.

The volume of pipeline exports of Russian gas to the European Union and Moldova in March increased by 26% compared to the level of March last year to 2.74 billion cubic meters, Vedomosti wrote on April 3. This is the maximum level of supplies since August 2023, when the monthly export volume amounted to 2.84 billion cubic meters.

Structurally, the share of the European region in Russian exports changed in March 2023, Akhmedova says. On average, from March 2022 to February 2023, the EU's share in Russian exports was 27%, and after the full-fledged entry into force of restrictions on the supply of Russian oil and petroleum products, the average monthly share decreased to 11.2%. The decrease in the volume of exports of oil and petroleum products to Europe is primarily due to the oil embargo by the EU, agrees Nikolay Dudchenko, analyst at Finam.

Restrictions imposed by the EU and G7 countries on the supply of oil and petroleum products from Russia became effective in early December 2022 and early February 2023, respectively. They imply a ban on their maritime supplies to the EU (while pipeline supplies are still allowed). In addition, a price ceiling was introduced: the cost of crude oil is set at $ 60/bbl, the price of expensive petroleum products from Russia (for example, diesel) cannot exceed $100/bbl, cheaper (fuel oil) – $45/bbl.

The share of oil and petroleum products supplies from Russia to European countries last year amounted to no more than 5% of total exports and is unlikely to increase this year, says Viktoriya Trifonova, an expert at Yakov and Partners. The continued reorientation of supplies to Asian destinations also contributes to the decrease in supplies, she notes.

The decrease in the value of exports in the first quarter of 2024 is due to foreign trade restrictions and a decrease in world prices for gas, coal and a number of metals, the Central Bank indicated. In addition, the downward pressure on exports, according to the regulator, was also caused by a decrease in production at refineries.

However, the negative dynamics of supplies is not typical for all categories of exported product groups, Vladimir Salnikov, head of the real sector of the CIACP, drew attention. For example, in relation to certain types of mineral fertilizers and metals in certain European countries as a whole, significant growth was recorded in 2022-2023 due to the lack of alternatives for European buyers, he notes.

The decline in exports from Russia to the EU will continue in the new sanction’s reality, says Pavel Ryabov, economist, author of the Telegram channel Spydell Finance. Moreover, the degradation of trade may accelerate due to new initiatives to limit the export of Russian liquefied natural gas (LNG) to Europe. The EU is considering the possibility of including a ban on Russian LNG supplies in the next package of anti-Russian sanctions, it may start working in the spring, Swedish Foreign Minister Tobias Billstrom said on April 22.

Taking into account the sanctions on imports from Russia, exports to Europe are likely to stabilize in the range of 30-40 billion euros per year, Isakov expects.

Source: https://www.vedomosti.ru/economics/articles/2024/04/24/1033744-eksport-iz-rossii-v-evropu-ruhnul-vdvoe?utm_campaign=newspaper_24_4_2024&utm_medium=email&utm_source=vedomosti