The supply tightness in South Africa’s coal market was expected in January, exacerbated by maintenance work being carried out by South Africa’s state-owned rail freight operator – Transnet (transports coal to RBCT port), who have now extended the dates for maintenance work by another one week i.e. till 25 Jan’21.
This news is quite crucial for key South African coal importers like India and Pakistan. The 15-day shutdown is going to heavily impact the transportation of coal from mines to RBCT port resulting in tight supplies of coal.
On 8 January, the RBCT port had thermal coal stock of 3.09 mn t which was already below the average of 4 mn t. Now with maintenance work going on till 25 January, there will be major supply crunch at the port.
Portside prices in India likely to go up
CoalMint learned from market source, that the portside prices for RB2 (5500 kcal/kg NAR) coal has moved up by INR 200/t from last week to INR 5,800/t ex-Gangavaram, and is anticipated to rise further in the coming days on restricted supply.
The thermal coal stock at Gangavaram port has fallen by 6% w-o-w basis and stood at 2.95 mn t towards the end of Week 1 – Jan’21, according to stock data maintained with CoalMint.
When the South African thermal coal prices was rising in December, buyers in India didn’t make any significant bookings for January shipments as they waited for prices to fall post the New Year holidays. However, that didn’t happen and on the contrary by 8 January the FoB prices moved up once again.
“No major supply tightness was anticipated amid the 7-day scheduled maintenance work, however, now with the extension there will be a definite supply crunch for South African coal in India that will push portside prices up”, remarked a Raipur (India) based coal trader.
The vessel line-up data maintained with CoalMint reveals that by 17 Jan’21 about 1.81 mn t of South African thermal coal is to arrive at Indian ports.
Subsequently, although no major improvement is being anticipated in the demand-side, the rise in portside prices would be completely supply-driven in the near term.
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