Amidst the sharp rise in prices, South Africa’s thermal coal exports fell to 4.9 million tonnes (mn t) in Jun’21, down 17% m-o-m and 23% y-o-y, CoalMint’s vessel line-up data reveals.
Coal exports to India were recorded at 2.13 mn t, down 33% m-o-m and 24% y-o-y. Exports to Pakistan fell by 26% m-o-m to 0.75 mn t, while the same to China slipped by 24% m-o-m to 0.72 mn t.
Exports to South Korea, however, rose for the first time since Jan’21 to 0.15 mn t last month.
Escalated prices dent imports
Since the beginning of 2021, demand for South African coal remained strong from China due to rising power consumption and its ban on Australian coal. CoalMint data reveals, South Africa’s coal exports to China, which stood at 1.5 mn t in CY’20, rose to 3.73 mn t in the first six months of CY’21 amidst supply shortage in China as several cities also went under major blackout for a few days.
There have been supply-side concerns due to persistent issues in Transnet’s rail lines connecting RBCT Port. Further, many small mines suspended operations due to financial burden which resulted in material shortage. All these factors have kept South African coal prices elevated. Adding to the woes of importers were the escalated freight rates, which further made South African coal costlier against its peer Australian coal.
The RB2 5,500 NAR grade prices rose by 5% in Jun’21, averaging $88/t, FoB whereas the same, since Jan’21,moved up by 35%.
With increasing prices, buyers of South African coal, especially from India, are switching to cheaper domestic coal. Pakistan buyers are also either importing Australian coal or looking for domestic coal.
Exports to major destinations decline
Owing to the sharp rise in prices, South African coal exports to major destinations like India, Pakistan and Vietnam fell sharply last month.
A sharp decline in domestic demand in India amidst rising imported coal prices and resilient freight rates led to a 33% m-o-m drop in South African coal exports to 2.13 mn t in Jun’21.
Exports to Pakistan also fell sharply last month with a rise in imports from Australia and Russia along with increased usage of domestic coal, and liquified natural gas for power generation.
Vietnam’s coal imports from South Africa fell sharply to 0.11 mn t last month, down 48% m-o-m due to its rise in domestic coal production and inclination towards Australian coal due to its relatively cheaper prices.
Outlook
CoalMint believes, South African coal exports are likely to remain under pressure in the upcoming months as the ongoing supply tightness would keep prices higher.
The recent train derailment in the eastern Cape region of South Africa has aggravated the supply crunch at RBCT ahead of the rail network’s annual maintenance from 13-19 Jul’21.
Demand from China may remain stable due to its improving domestic coal production, while imports from India are likely to remain low amidst the ongoing monsoon season and prevalent weak demand from end-users.
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