South African thermal coal export shipments to India drop 43% m-o-m in Aug’21

South Africa’s total thermal coal export shipments in Aug’21 stood at 4.59 million tonnes (mn t), up 2%, m-o-m. The country’s coal export shipments to India continued declining in the last four months, dropping by 43% on month to 1.15 mn t.

Elevated South African coal prices have been the key reason for the decline in exports to India. The average monthly price of South African RB2 (5500 NAR) grade in Aug’21 stood at $110/t FoB, up 10%, m-o-m and by 52% against Jan’21 prices.

Indian users of South African coal increasingly shifted to domestic coal amidst elevated imported coal prices.

Domestic coal offered by CIL and its subsidiaries

Qty in mn t

In addition, resilient vessel freight rates have also weighed on buying sentiments of imported coal since the past few months. The capesize vessel rates between RBCT to India increased by 12% since Jan’21 to $18/t at present.

S. African coal export shipments to China decline

Since 2015, China avoided S. African coal imports due to the presence of trace elements. However, since the beginning of this year, China started importing South African thermal coal amid shortage within the country during the more-than-usual hot summer season.

However, in the last two months, S. African coal export shipments to China witnessed a steady decline, falling by 13%, m-o-m to 0.56 mn t in Aug’21. Chinese traders avoided booking costlier S. African coal and preferred booking low-CV Indonesian coal, relying more on coal coming from Russia and Mozambique.

S. African coal makes its way into the UAE

Amid escalated high-CV Indonesian and Australian coal prices, power plants in the UAE are heard to be booking relatively cheaper S. African coal over the past two months. The country imported a combined volume of 0.70 mn t during the Jul-Aug’21 period as against 0.27 mn t during Jan-Jul’21.

According to market participants, Dubai’s major power utility, Hassyan Power Plant, has booked a long-term contract for South African coal. In fact, the power plant is expected to book 1.5 mn t of thermal coal from South Africa for the remainder of 2021.

Exports to South Korea, Pakistan rise

A sharp rise in Australian coal prices last month also compelled several countries, usually importing high-grade thermal coal for power utilities, to shift to South African coal.

South African thermal coal export shipments to South Korea recorded a 104%, m-o-m rise to 0.32 mn t last month amid rising power demand.

South African coal shipments to Pakistan also recorded a 36% increase on month to 0.90 mn t last month, as unrest in Afghanistan dampened Pakistan’s coal imports from the neighbouring country and compelled importers to rely on high-priced imports.

Top import destinations of South African coal

* Qty in mn t

Outlook

CoalMint believes South African coal exports to various countries are likely to increase in Sept’21 amidst supply constraints in Indonesia due to heavy rains, domestic coal shortage in India, and winter restocking in South Korea and Vietnam.