South African thermal coal exports fall 9% in Jul’21 on logistic woes

South Africa’s (SA’s) thermal coal exports continued to fall for the second consecutive month to 4.5 million tonnes (mn t) in Jul’21, down 9% m-o-m and 28% y-o-y, CoalMint’s vessel line-up data reveals.

Top importing countries of South African coal

* Qty in mn t

Series of disruption in SA dent Jul’21 exports

The arrest of former President Jacob Zuma last month, which triggered violent riots in KwaZulu-Natal (KZN) and Gauteng province, led to a major disruption in key commodity supply chains, industrial output, and consumer demand.

Durban and Richards Bay ports which handle the majority of marine services, had to suspend operations, while Richards Bay Coal Terminal (RBCT) halted loadings for nearly two days.

Though services resumed gradually after a week, a massive cyber-attack later prompted Transnet Port Terminals to declare force majeure across all container terminals, including Richards Bay and Durban ports.

Coal transport from mines to the port, and discharge of cargoes were delayed as port divisions were manually tracking containers.

This came after two major train derailments a few months back, which had already impacted shipments from the country this year.

Several South African miners that had previously planned to take advantage of the rising global coal prices and China’s renewed interest in South African coal also suffered huge losses.

Exxaro Resources, South Africa’s biggest coal miner, said its exports would remain subdued in 2021. Further, owing to the train derailments, lack of locomotives, sabotages and cable theft it had already lost 2 mn t of export demand during the Jan-Jun’21 period, it said in a conference.

Surge in prices further keeps importers at bay

Supply concerns arising out of logistics woes further lifted RB2 5,500 NAR grade prices by 13% in Jul’21, averaging $107/t, FoB.

With increasing prices, buyers of South African coal, especially from India, continued with their procurement of cheaper domestic coal, while Pakistani buyers resorted to procuring coal from neighbouring Afghanistan.

Sluggish demand from the sponge iron sector in India, and Pakistani cement manufacturers opting for Afghan coal resulted in lesser bookings from these two countries that are major buyer of South African coal.

Rising Covid-19 cases since Jul’21 in Vietnam, on the other hand, also led to a drop in its coal imports last month, while coal exports to China fell slightly last month due to the improving coal supply in the country. 

Outlook

CoalMint believes, the elevated South African coal prices are likely to keep coal exports from the country under check in the upcoming month.

Further, unforeseen logistic concerns in the country may also hamper coal exports despite the likelihood of demand improvement, especially from Pakistan.