South African thermal coal export shipments to India rise 57% in Sept'21

South Africa's coal export shipments to India rose by 57% m-o-m to 1.80 million tonnes (mn t) in Sept'21 after a four-month decline. The increase comes on the back of an acute domestic coal shortage in India that emerged in late-Aug'21.

However, South Africa's total thermal coal export shipments in this month, remained largely unchanged at 4.56 mn t against 4.59 mn t in Aug'21.

Elevated South African coal prices have been the key reason which capped a sharp rise in exports to most countries. The average monthly price of the South African RB2 (5500 NAR) in Sept'21 stood at $146.8/t FOB, up 28%, m-o-m and by 103% against Jan'21 prices.

Indian traders seek S. African coal

There has been a domestic coal crunch with stock levels of the Indian power plants falling to three-year lows of t 8.6 mn t towards September-end. This was mainly because of heavy rains in the mining areas which hampered production and supplies . Moreover, a major quantity of coal from Coal India and its subsidiaries was diverted to the power sector, leaving the the non-power sector with limited supply.

With this issue unlikely to get resolved in the short-term, Indian importers booked South African coal to supply the same to their key consumers - the sponge iron sector.

Also, a very limited stock of South African coal was left at various Indian ports - following months of dull trading due to rising imported coal prices and freight rates - compelling buyers to refill their stocks.

China adopts wait-and-watch mode

South African coal shipments into China fell to 0.09 mn t in Sept'21, down 47% m-o-m as Chinese traders adopted a wait-and-watch mode in early-September on expectations of a correction in prices.

However, with the sudden drop in shipments from Indonesia due to heavy rains in late-September and reduced inventory at Chinese power plants, the government urged companies to ink long-term coal contracts to meet the peak winter season demand.

This development pulled up South African RB1 (6000 NAR) grade prices by $30/tonne (t) within a week as Chinese traders rushed to fill in the supply gap.

SA coal exports to the Netherlands, Sri Lanka increase

South African coal export shipments to the Netherlands, Sri Lanka and Bangladesh rose sharply last month. Amid a rise in US coal prices, a key supplier of thermal coal to the Netherlands, along with Colombian coal being diverted to China, demand for the comparatively cheaper alternative of South African coal increased.

Exports to the Netherlands moved up by 47% m-o-m to 0.25 mn t in Sept'21. Shipments to Sri Lanka rose to 0.30 mn t in Sept'21 after a five-month gap, while shipments to Bangladesh rose to 0.15 mn t last month from nil in the previous month.

Outlook

CoalMint believes South African coal exports to various countries are likely to increase in Oct'21 amidst supply constraints in Indonesia due to heavy rains, domestic coal shortage in India, and winter restocking in China.

A sharp rise in global LNG prices due to reduced supply has also increased demand for coal as most power plants have been restocking ahead of the winter season.

However, the rising trajectory of South African coal prices may cap any significant rise in exports in October.