South Africa’s total thermal coal export shipments registered a sharp decline of 17% m-o-m to 61.6 million tonnes (mn t), CoalMint vessel line-up data revealed. This comes after a series of logistical disruptions throughout the year.
As a result, South African coal prices almost doubled as RB1 (6000 NAR) grade prices averaged $142.2/t, while RB2 (5500 NAR) were at $98/t on FOB basis in CY21.
Transnet disruptions
Right from the beginning of the year, the country’s largest rail operator Transnet continued to face disruptions arising out of scheduled maintenance, force majeure at Richards Bay Coal Terminal (RBCT), cable thefts, and civil unrest by the middle of 2021, exerting enormous pressure on South Africa’s coal exports.
Owing to Transnet’s service failures, bulk commodity exporters have experienced a major loss in revenues and an opportunity cost of at least $141.9 bn, according to the Minerals Council South Africa.
Back in Aug’21, the country’s key exporter, Exxaro’s management had expressed concerns over exports from the country after they lost around 9 mn t of coal exports in H121, calling it, “one of worst export rail performances for the industry.”
Over the last two months as well, coal stock at RBCT Port has remained at a critical state as it is estimated at 1.9 mn t currently as against an average 5 mn t earlier.
Shipments to India register highest decline
Export shipments to India had declined sharply by 31% y-o-y to 25 mn t in CY’21 amid its elevated coal prices and weak domestic demand.
The volatility in South African coal prices had largely dented imports by Indian sponge iron manufacturers as rising raw material prices weighed on sales volumes.
Localized lockdowns from rising Covid infection and weak manufacturing activity also had compelled the sector to work under reduced capacity for the most part of the year.
Exports to Pakistan also registered a fall by 13% y-o-y to 10.4 mn t due to the risen input cost of the cement sector.
Pakistan’s total cement sales, the leading thermal consuming sector, fell by 4% on year to 56.3 mn t in CY’21, data released by the All Pakistan Cement Manufacturers Association showed.
Exports to China rise manifold
Shipments to China registered a sharp rise by 337% y-o-y to 6.9 mn t as traders tried to fill the supply gap created after the former’s ban on Australian coal imports in latter half of 2020.
Over the last few years, China had not been a major buyer of South African coal amid several issues of trace elements. However, it became one of the sources of coal imports in CY’21, after supplies from Indonesia and Russia fell short of demand.
Exports to Netherlands, South Korea rise
Owing to the shortfall in gas supply last year, several European countries turned back to coal imports as South African coal export shipments to the Netherlands rose 271% y-o-y to 1.77 mn t.
Shipments to South Korea also rose sharply by 98% y-o-y to 2.9 mn t m-o-m as utilities rushed to secure coal supplies.
Short-term outlook
Transnet rail issues and persistent higher coal prices in South Africa are likely to keep exports under pressure in CY’22. Chinese demand may also remain limited to some extent following rise in coal output in recent months.
Leave a Reply