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South Africa: RBCT port to face supply disruption amid Transnet's train derailment

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Non Coking
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29 Apr 2021, 13:08 IST
South Africa: RBCT port to face supply disruption amid Transnet's train derailment

South Africa's Trasnet Freight Rail (TFR) has confirmed derailment of 44 wagons that has damaged 1km of the rail line. The mishap that happened yesterday afternoon resulted in wagons piling upon each other and closure of both the rail lines carrying coal to RBCT port. The expected time of recovery and the assessment of the damage happened is still awaited.

The TFR team is of the opinion that the rail line would be functional either by Friday night or by Saturday morning and the estimated supply loss is 0.5-0.6 mn t. At present, the coal stock at the RBCT port is around 3.3 mn t.

TFR's consistent supply disruptions and rising index

The rail-line disturbance has made already elevated API4 index to move up by $3/t d-o-d basis as the same stood at $89.5/t (yesterday) for May'21 and is expected to shoot up further today.

The South African API4 index that touched the lows of $50/t in May last year due to the pandemic-induced lowered demand has been rallying since the start of 2021. And this increase can be attributed to the supply constraints caused at TFR, rather than any significant improvement in the demand.

In January 2021, TFR's coal volume deliveries were affected by a planned supply chain-wide maintenance shutdown, which was immediately followed by disruptions related to the damage caused by excessive rain following tropical cyclone Eloise.

Legacy issues also exacerbated the situation as TFR's spare parts contract with CSR (China South Rail) and CNR (China North Rail) were suspended due to allegations of fraud and corruption, making many locomotives non-functional.

Even before lockdown happened in Mar'20, Transnet had been facing unprecedented levels of vandalism and theft of overhead cables that had made the rail line to cancel 170 goods trains a month in Jan'20.

Impact on Indian market

The elevated API4 index and risen freight charges from mid-Feb'21 have already deterred South African coal buying from India. The country's thermal coal import from S.Africa during Jan-Mar'21 have plunged by 42% y-o-y and stood at 6.71 mn t, reveals CoalMint's vessel-lineup data.

However, yesterday's rail disruption is unlikely to have major impact on Indian buying sentiments in the short-run as Indian importers are already at bay and are delaying their coal purchases amid rising COVID cases, reduced demand from end user-segment, and shut-down of steel plants due to oxygen shortage in the country.

 

29 Apr 2021, 13:08 IST

 

 

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