The vessel line-up data maintained by CoalMint reveals that South African coal export shipments have dropped by 2.8% m-o-m from 6.42 mn t in Jun’20 to 6.24 mn t in Jul’20.
Abrupt rise in S. African exports to Vietnam halts
- South African coal exports to Vietnam recorded a plunge of 50% m-o-m and stood at 0.51 mn t in July.
- When the coal demand especially in India plunged amid COVID-led lockdown, South African coal prices fell significantly. Taking advantage of this and as an alternate export destination, S African vessels were diverted to Vietnam’s power sector leading to an abrupt increase in its coal imports from the country between Apr-Jun’20.
Exports to India remain stable
- India continued to remain the top export destination for South Africa at 2.81 mn t and no significant change was recorded in the same m-o-m basis.
- Although the trade between the two countries is returning to normalcy with the easing of lockdown restrictions, it is still below the last year’s monthly exports average of 3.43 mn t.
- In Jul’20, Paradip topped the list of receiving highest quantity (0.69 mn t) of S African coal vessels, leaving behind the usual Gangavaram port (0.53 mn t).
- About 75% quantity was booked by sponge iron producers that have their plants in the cities near the Paradip port. Market participants reveal that recovery in steel demand had made the sponge producers increase their raw material, thermal coal purchase.
Improved demand drives up Pakistan’s imports
- On the other hand, exports to Pakistan surged by 20.5% m-o-m and stood at 0.94 mn t. This can be attributed to improvement in country’s power and cement demand.
- With further opening up of industries, the summer and monsoon seasons in the country typically see an uptick in demand for power, supporting the thermal coal requirement. Also, the country’s provisional cement offtake increased by 7% m-o-m in Jul’20, at 4.97 mn t.
Exports to China move up
An interesting observation is that China’s coal imports from South Africa increased from 0.06 mn t in June to 0.17 mn t in July amid increasing animosity between China and its key coal exporter, Australia, as per the market participants.
Outlook
South African coal exports are anticipated to remain at similar level in August as monsoon is typically a dull season for the steel and cement sector in India. As India is the biggest buyer of South African coal it is pertinent to take note of the Indian demand expectation in the coming days.
CoalMint learnt from market sources that with a surge in a surge in sponge iron prices there is speculation in the market that scrap demand would increase and that of sponge’s would suffer – impacting thermal coal demand.
Leave a Reply