South African thermal coal exports to India have risen by 31% m-o-m to 2.1 mnt in May, CoalMint vessel line-up data revealed. A sharp fall in South African coal prices from its peak in March 2022 boosted exports to India.
Shipments to India had reduced drastically in March and April, as elevated prices made sponge iron manufacturing in India almost unviable. Demand, however, remained intact as domestic supplies from Coal India and its subsidiaries were limited.
South Africa’s overall thermal coal exports, however, remained largely unchanged at 5.2 mnt last month amid a series of logistic disruptions surrounding Richards Bay Coal Railing, wherein cable theft, and vandalism across railway lines had compelled miners to transport via trucks, slowing down the pace of exports from the country.
Thermal coal trade balancing
*Qty in mnt
With sanctions on Russia by the European Union and Japan, South African coal exports to The Netherlands rose by 24% m-o-m as it continues to wean itself off from Russian supplies.
Shipments to Japan also rose by 22% amid rising power demand in the country during summer season. The country is set to implement a nationwide energy-conservation effort from 1 July-30 September, amid concerns that the existing power system may not handle demand in peak summer.
Shipments to China witnessed a sharp decline of 31% m-o-m in May, after rising sharply in April. Chinese traders were more focussed on taking in Russian supplies as heavy discounts were offered by miners.
South Africa’s exports to Pakistan and South Korea also fell sharply due to their heavy reliance on Indonesian supplies surrounding its competitive prices.
Shipments in January-May 2022
Despite a rise of over 122% y-o-y in South African coal prices, shipments from the country remained largely unchanged at 26.2 mnt in January-May 2022.
European countries and Japan have been the major buyers of South African coal so far this year, while shipments to India, Pakistan, and China have declined sharply on a yearly basis.
Short-term outlook
Amid the sharp decline in steel prices in India, South African coal demand is likely to remain limited for the next few months. Traders have lowered portside offers as sponge iron units have reduced purchases to avoid losses.
Overall South African exports, however, will remain firm with strong European and Japanese demand amid the approaching full-fledged sanctions on Russian exports kick-starting from mid-August.
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