South Africa : Thermal coal exports rise 4% m-o-m in Mar'24; Europe demand boosts volumes
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South Africa's thermal coal exports rose by 4% m-o-m to 5.36 million tonnes (mnt) in March 2024 as against 5.16 mnt in February 2024. However, exports rose by 4.5% y-o-y compared to 5.13 mnt in March 2023.
Europe's heightened demand for coal is reshaping traditional trade routes, leading to increased shipments from South African mines to the continent. Typically, coal from South Africa is directed eastward, primarily to Asia, with only a small portion reaching European markets. However, recent geopolitical events, including sanctions and decisions by companies to halt trade with Russian counterparts, have disrupted the global coal trade dynamics.
With concerns over further sanctions and the ongoing conflict potentially impacting coal sourcing from Russia, European utilities are seeking alternative suppliers. As a result, there has been a notable surge in demand for South African coal in Europe. This shift in demand has prompted a redirection of trade routes, with bulk carriers now heading westward from the Richards Bay Coal Terminal, South Africa's primary export hub.
The increase in shipments to Europe is evidenced by the rising key coal prices in the region, reaching record levels. European utilities have significantly increased their coal imports from South Africa in recent weeks, leading to a decline in stockpiles at Richards Bay. Despite logistical challenges along the rail lines to the port, the coal industry appears to be managing the increased demand adequately for the time being.
Exports to major Asian countries
Qty in mnt
India was the largest buyer of South African coal at 2.33 mnt in March 2024, up by 12% m-o-m as against 2.07 mnt in February 2024. Shipments rose on increased demand from sponge producers. In India, Coal India Limited typically ramps up production prior to the summer season to counterbalance production losses during the monsoon period. However, some imports may occur before the onset of the monsoon, particularly as certain end-users seek to stock up before rainfall disrupts domestic mine operations.
State-run miner Coal India Ltd (CIL) continued its robust performance in terms of coal production in 2023-24 (FY'24). CIL's production rose by 10% y-o-y to 773.6 mnt in FY'24 as against 703.2 mnt in FY'23. Total dispatches have risen by 753.5 mnt as compared to 694.7 mnt in FY'23.
Shipments to South Korea dropped by 5% m-o-m to 0.57 mnt in March 2024 as against 0.60 mnt in February 2024. Exports to Pakistan rose by 10% m-o-m to 0.40 mnt in March 2024. Exports to Vietnam stood at 0.30 mnt as against nil in the previous month.
Moreover, shipments to Taiwan surged more than two-fold m-o-m to 0.17 mnt as against 0.08 mnt in February 2024.
Exports to Europe
Qty in mnt
Among European countries, The Netherlands stood as the largest importer at 0.16 mnt. Amid apprehensions of additional sanctions and the conflict's impact on coal supply from Russia, European utilities are diversifying sources, fuelling a rise in demand for South African coal. Shipments to Germany stood at 0.08 mnt, remaining stable m-o-m in the week under review.
Train derailment disrupts coal traffic to Richards Bay
South Africa's Transnet Freight Rail (TFR) confirmed a train derailment involving four locomotives and six wagons, disrupting traffic destined for Richard's Bay. The incident occurred on 2 April in the Richards Bay south region, impacting the coal export line. Market participants reported no current movement in the affected area. Operations have ceased on three rail lines, affecting rail transportation into both the Richards Bay Coal Terminal (RBCT) and the Richards Bay multi-purpose terminal (MPT).
Outlook
Exports to India are anticipated to rise amid improved demand from sponge producers. However, robust domestic supply in India may constrain South African coal exports. The recent train derailment in Transnet's network adds further uncertainty to export volumes.
