South Africa coal exports fall by by 5% in August despite rise in Indian demand

Key Highlights:

---South African coal exports in Aug'20 were recorded at 5.94 mn t against 6.23 mn t in Jul'20. However, the same is up by 14% on y-o-y basis.

---India continued to be the top export destination for S. African coal at 3.40 mn t, up by 21% m-o-m basis followed by Pakistan at 1.04 mn t (up by 5% m-o-m).

---Exports to Sri Lanka has been reduced to nil in the last three months, and totalled to 1.43 mn t during Jan-Mar'20.

---S.African coal exports to Vietnam observed a sudden spike during Apr-Jul'20. However, Vietnam coal imports have come back to around the usual monthly import volume in Aug'20 (0.28 mn t).

Reasons for demand upsurge:

---As economies come out of the lockdown lull the recovery in steel demand in both India and Pakistan supported the South African coal exports in August.

---Country's coal exports to India in August have almost touched last year's monthly average of 3.42 mn t of 2019.

---Vietnam became one of the preferred export destinations for S.African thermal coal as rock-bottom prices supported its demand from the country. S.African coal was diverted to Vietnam during the COVID-led lockdown in key export destinations, India and Pakistan.

Indian scenario:

---During Jan-Aug 2020, South African coal exports stood at 47.5 mn t against 48.9 mn t during same period last year with Gangavaram port receiving the highest shipments.

---Exports to India stood at 22.7 mn t during the said period against 27.8 mn t in Jan-Aug'19. Whereas, exports to Pakistan stood at 6.90 mn t, up by 7.7% y-o-y basis.

Future outlook:

Market experts believe that the worst is over for South African coal demand from India. In case of Pakistan also, amid controlled cases of COVID in the country and rising power demand, requirement for South African coal is anticipated to rise in the upcoming months.