South African coal export shipments in Jun’20 have registered a fall of 5% m-o-m at 6.42 mn t, but have exceeded its last year’s monthly average of 6.21 mn t, CoalMint vessel line-up data reveals.
In Q2 CY20, South African coal export shipments plunged by 12% on y-o-y basis and stood at 17 mn t against 19.4 mn t in Q2 CY19.
In this context, let us analyse as to how the country’s coal trade dynamics changed over the past three months (Apr-Jun’20) following the Coronavirus (Covid-19) outbreak.
Vietnam emerged as preferred export destination
- India has been South Africa’s top export destination (with 55-60% share) since past few years after its traditional market, Europe, started ditching thermal coal use to curb greenhouse gas emissions.
- However, in March-end when Covid-induced lockdown was announced in India, the country lost its top position as South Africa’s biggest thermal coal buyer to Vietnam in April.
- The rapid spread of Covid-19 dramatically impacted the South African thermal coal prices which declined by almost 20% from Mar–Apr’20.
- Taking advantage of this situation, Vietnam secured South African coal cargoes at cheap prices amid absence of other buyers in the market. RBCT port’s coal exports to Vietnam swelled by a whopping 157% m-o-m basis in April at 1.39 mn t, whereas exports to India fell by 77% m-o-m and stood at 0.77 mn t in Apr’20.
Export to India rebounds in June
- Now two months later i.e. in June, India is back being top export destination for South Africa at 2.89mn t(coming closer to last year’s monthly average of 3.24 mn t) whereas exports to Vietnam slipped to 0.57 mn t.
- India entered into Unlock phase 1 in June where it further eased the lockdown restrictions resulting in improved industrial and construction activities and revival of thermal coal demand from South Africa.
- Pakistan remained consistent (second-top export destination) in securing thermal coal from RBCT port despite the lockdown announced in the country in March with an average of 0.79 mn t in past four months (from Mar-Jun).
Outlook
In the coming months, India and Pakistan will continue to remain the most favoured export destinations for South African coal.
Whereas in case of Vietnam, although growth in the power sector would support thermal coal imports, the same would be preferably procured from its traditional supplier, Indonesia which is currently struggling with tepid demand from its top procurer, China.
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