South Africa non-coking coal export shipments stable y-o-y in H1CY'24

• Exports to India increase by 16% y-o-y
  
  
• Exports to EU plunge on lower steel consumption
  
  

South African non-coking (thermal) coal export shipments were at 30.41 mnt in January-June, 2024 or the first half (H1 CY'24) compared to 30 mnt recorded in H1CY'23, up over 1% y-o-y.

However, thermal coal exports rose by 4.42% m-o-m to 4.96 million tonnes (mnt) in June 2024 as against 4.75 mnt in May 2024. However, on a y-o-y basis, June 2024 exports dropped 4% to 4.96 mnt as against 5.17 mnt in June 2023.

Exports to India rises on increased demand from power & sponge sectors

India was the largest buyer of South African coal, at 14.68 mnt, in H1CY'24 against 12.64 mnt in H1CY'23, a rise of 16% y-o-y. A lion's share of India's imported non-coking coal is used in the power sector which, according to Central Electricity Authority (CEA) estimates, is growing at a CAGR of 8-10% and is in sync with the country's overall economic growth.

BigMint data reveals that India's power consumption in the first five months of the current calendar year touched 700,855 million units (MU) as against 639,304 MU in the same period last year - an increase of around 10% y-o-y. This is because the country was in the grip of a sustained heat wave since end-April this year, with temperatures touching nearly 50 degrees Celsius in many parts of India.

India's sponge iron production increased to 22.2 mnt in January-May 2024 as against 19.39 mnt in the same period last year. Increase in sponge iron capacities and increased production from existing ones have boosted coal imports.

Vietnam second-largest importer

Vietnam remained the second-largest importer at 3.42 mnt in H1CY'24 with volumes more than doubling from 1.05 mnt in January-June, 2023. Southeast Asian countries saw an increase due to a significant rise in steel production. This led to an increase in demand for raw materials, including coal.

Exports to South Korea remained largely range-bound on y-o-y basis at 2.68 mnt in H1CY'24.

Exports to Europe drop sharply

Shipments to the Netherlands dropped significantly from 1.81 mnt in H1CY'23 to 0.62 mnt in H1CY'24. War-related disruptions, unprecedented rises in energy prices and production costs have taken a toll on the European Union's apparent steel consumption in 2023, which dropped nearly 9% to 126 million tonnes (mnt) against 138 mnt in 2022. In 2024, the EU's steel-using sectors' growth is projected to dip 1%, due to the second recession in a row in the construction sector, persistent geopolitical tensions, and the lagged impact of high interest rates on the manufacturing sector, before picking up moderately by 2% in 2025.

Price trends: SA coal prices drop 22% in H1CY'24

South African RB2 coal prices dropped by 22% in H1CY'24 to $87/t FoB as against $112/t FoB seen in H1CY'23. Prices dropped on easing demand and low buying interest from major Asian countries. Thermal coal demand in the past few months has been subdued amid sufficient domestic supplies and high port inventories at Indian and Chinese ports. Indian end-users have been heard to have majorly shifted to domestic material for their sponge production.