After a month of weak exports in July, South African thermal coal shipments rose by 12% m-o-m to 5.5 million tonnes (mnt) in August, CoalMint vessel data shows.
The rise in exports was attributed to higher shipments to India, South Korea, and Netherlands. Shipments to Japan and China, however, declined amid rising deliveries of Australian and Russian coal in these markets.
Trade flow
*Qty in mnt
After falling sharply over the last two months, South African thermal coal exports to India recorded a 25% rise in August. The August export volumes shown in the line-up would arrive a month later. The sponge iron manufacturers are opting for either the blend of Russian and South African coal for DRI production.
Shipments currently coming into India includes more of low-CV RB3 (4800 NAR) grade coal as the Indian DRI producers have switched to the same in past few months. RB3 coal gained its prominence only in Indian market given its suitability for sponge iron industry. The higher-grade and costlier South African coal like 5500 NAR and 6000 NAR is being diverted to European power sector.
Exports to Europe rise
Shipments to the Netherlands, rose by a whopping 168% last month as tight gas supplies from Russia compelled utilities to increase their coal purchases.
Coal-fired power generation has gained strength in the country as electricity production from coal amounted to 3 bn kWh during April-June 2022, higher by 12% y-o-y.
Exports to Spain and Germany also were higher at 313,860 t and 180,000 t respectively due to their rising dependency on coal.
Exports to Poland, on the other hand, declined sharply by 56% amid the country’s rising demand for low-cost Indonesian coal.
Shipments to Asia
Elevated LNG prices globally, compelled South Korean buyers to procure 1.1 mnt of South African coal last month up by 4% m-o-m. Power utilities were seen raising tenders for the upcoming months and also issuing long-term contracts to secure supplies ahead of the winter.
Shipments to Japan declined by 41% in August amid increased sourcing from Australia. Japanese buyers usually sign long term contracts (LTAs) with Australian suppliers at the start of their financial year in April. Japanese power utilities generally prefer high-CV Australian coal over South African material due to its trace elements.
Short-term outlook
South African thermal coal exports are likely to rise in the coming months with strong European demand amid gas supply uncertainty from Russia and winter restocking demand in Asia and Europe.
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