South African coal prices have moved up on unrest caused by local protesters, creating supply disruption.
Communal unrest on the main railway line has disrupted the flow of coal between the mine and Richards Bay Coal Terminal (RBCT). The issues raised by the community were related to employment and central wage negotiations.
The latest disruption followed congestion at the coal terminal due to poor weather conditions, which delayed vessel loading by 10 days. As a consequence, coal prices went soaring this week, South African coal Index price (API 4) increased to USD 81 yesterday.
Demand for South African Coal from India was good until May, but the oncoming monsoon season weakened the demand from the country. However, given the low demand for South African coal, the latest disruption would have a limited impact on coal prices, as the labour protest and supply is soon to be resolved.
South African Coal imports into India had fallen 76% W-o-W to 0.19 MnT this week (28 Apr’17- 3 Jun’17) compared with 0.80 MnT in the previous week, according to the data maintained by CoalMint Research.
India had imported 37.56 MnT coal from South Africa in 2016, accounting more than 50% of the total coal (69.69 MnT) exported by South Africa during the period, according to the customs data.
Discounts for coal have also been increased in light of rising prices. 4800 NAR coal were offered at a discount of USD 15/MT to 6000 NAR, while discounts for 5500 NAR coal were at USD 8-9/MT this week.
Spot offers for South African 5500 NAR coal was assessed at USD 68/MT, FoB Richards Bay. While price offers for 4800 NAR were recorded at USD 53-54/MT, FoB Richards Bay this week.
Labour Protest over Wage Negotiation:
South Africa’s National Union of Mineworkers (NUM) had threatened to go on strike if the coal companies had pushed ahead with a plan to negotiate wages on a company-by-company basis, instead of collectively as an industry.
However, Strike activity in South Africa’s coal industry has been averted after a number of the country’s largest mining firms, including Glencore, Anglo American and Exxaro Resources agreed to conduct centralised wage negotiations.
Earlier, Coal producers in South Africa had decided to decentralise wage negotiations so that companies could discuss wages on mine-by-mine basis – a development that coal union flatly rejected.
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