After rising sharply in the first two months of 2022, South Africa’s (SA’s) thermal coal shipments to its top export destination, India, witnessed a whopping 42% m-o-m decline to 1.8 mnt in March, 2022, CoalMint’s vessel line-up data revealed.
Elevated prices also pulled down SA’s overall thermal coal exports to 5.2 mnt, down by 7% m-o-m.
The decline in shipments to India came as sponge iron manufacturers, the largest users of the South African RB2 grade, refrained from booking stocks at these higher price levels.
Escalated raw material prices since last year had already weighed on their profitability, forcing several independent units to either shut shop or work under minimum capacity.
The majority of these units shifted back to using higher proportion of domestic coal, prices of which later also rose sharply amid Coal India’s higher dispatches to the power sector.
Higher LNG prices boost Netherlands, Pakistan coal imports
Elevated LNG prices in the wake of western countries’ sanctions on Russia had compelled several countries to increase their dependency on coal.
As a result, South African export shipments to the Netherlands surged to 0.8 mnt in March 2022 from a mere 70,000 tonnes in February, 2022 as they looked for non-Russian-origin coal and gas following the European Union’s sanctions on Russia.
In 2021, Russia accounted for nearly 40% of all European gas imported, and 17% of its coal and coke imports.
Most parts of the EU have been facing a gas crunch since last year, as a majority of its requirements come from Russia. A big chunk of its gas usage has been replaced with coal.
The case was the same with Pakistan as the former’s imports from South Africa rose by 42% to 0.5 mnt following cancellation of LNG deliveries.
Shipments to Japan also rose sharply by 175% m-o-m to 0.4 mnt last month amid higher LNG prices, CoalMint data showed.
Exports to other major destination
Despite elevated prices, South Africa’s thermal coal exports recorded a remarkable rise in Morocco and Taiwan.
Shipments to Morocco rose to 0.4 mnt last month from 80,000 t in February 2022 as sanctions on Russia disrupted coal supply to the country.
Ever since 2020, Russia’s coal exports to Morocco have risen sharply, resulting in 87% share of its imports at present.
Shipments to Taiwan also rose to 0.22 mnt in March, 2022, up 38% m-o-m as it joined in with international sanctions against Russia.
Short-term outlook
The ongoing crisis between Russia and Ukraine has lifted demand for South African coal as Asian and European buyers scramble for non-Russian fuel. However, elevated prices may keep shipments to India under pressure in April.
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