South African Coal Export Shipments Plummet to a New Low in Apr'20

South African coal exports registered a dramatic fall of 32% m-o-m and 34% y-o-y basis in April'20 and stood at 4.06 MnT amid demand curbs from its key importer like India and CoalMint data reveals that this is a new low in the period of last five years.

Demand-supply scenario in South Africa

On the supply side, RBCT port operations briefly halted at the end of March as the government imposed a lockdown to contain the spread of Covid-19. But operations soon resumed, although at a reduced rate, as miners received government exemptions for strategic exports. The lockdown, which began on 26 March was extended until 30 April.

Despite supply-side restrictions in South Africa, with some mines placed on care and maintenance, there does not appear to be a shortage of supply for export and the trains transporting coal continued to arrive at RBCT port with stocks reviving to a level of 4.4 MnT in the mid of April.

On the other hand, it is the demand shrinkage in south Asia that have primarily driven the reduced export activity. In case of India, country's national lockdown was extended until 3 May, although certain economic activities were permitted. However, this ease of restriction was not enough to boost country's power, cement, and sponge iron demand.

Pakistan overtakes India as biggest importer

While South African coal demand from India plunged, the same saw an increase of 13% m-o-m basis from Pakistan as the country's imports stood at 0.89 MnT during the month, leaving India behind. This is because in the first week of April, Islamabad announced ease of restrictions on domestic construction activities and cement manufacturing starting from 14 April and also declared relief package for the constructions sector giving boost to the cement demand in the domestic market and in turn aided the sector's thermal coal requirement.

Apart from this Pakistan sufficed its regular monthly coal requirement from South Africa during April as its key exporter Indonesia diverted its coal exports more towards China.

Surge in Vietnam's coal imports

South African coal exports to Vietnam also surged by almost 54% m-o-m basis in April as with ports' closures in India due to lockdown, the South African coal exporters diverted their shipment to countries like Vietnam amid partial lockdown implemented in the country.

Zero exports to South Korea

Coal loadings to South Korea stood at nil for a fourth consecutive month against 0.29 MnT a year earlier. Restrictions to slow the spread of Covid-19 have weighed on South Korean electricity demand recently, compounded by unseasonably mild temperatures. And while spot prices currently favour coal burn over gas in the country's power mix, a prolonged spell of low oil prices may enhance the profitability of LNG imports.

Future outlook

The short-term outlook for May appears bleak amid demand curbs. However, with many countries easing lockdown restrictions and allowing industrial activities, South African coal exports in the ongoing month may likely observe a surge against the April month's shipments.