South Africa's coal export shipments record dramatic rebound in May'20

After the continuous plunge for two months, South Africa's coal export shipments bounced back by whooping 70% at 6.59 MnT in May'20 against 3.87 MnT in Apr'20, vessel line-up data maintained with CoalMint reveals.

The key reason attributed is increased trade from South Africa's top export destination, India, for the past few years. In May, former's coal shipments to India stood at 1.78 MnT against 0.77 MnT in April.

Even before the lockdown was announced in the last week of March, Indian buyers limited their coal purchases (especially in the second half of the month) from South Africa, in anticipation of uncertainty ahead. Further, in April there was very limited booking due to lockdown restrictions in place, thus affecting South Africa's export shipments to India for two months.

However, in May, India eased its restrictions allowing industrial activities to resume operations resulting in which Indian coal importers once again became active in the market.

Vietnam scores over Pakistan

An interesting fact observed during the month is that Vietnam overtook Pakistan and stood second amongst South Africa's coal export destinations.

Amid the absence of buyers from other Asian countries in the last two months, South Africa has started diverting their export shipments to Vietnam. The Vietnamese buyers are active as the lockdown in the country lasted only for two weeks and the country's economic activity is resilient compared to other countries.

In the case of Pakistan, there was an increased buying of South African coal by cement manufacturers in April, due to the government's announcement of stimulus package for the construction sector. However, the sentiments changed in May due to increased cases of COVID-19 in the country and month-long Ramazan festival.

Diversification of exports

South Africa diversified its export shipments to countries like China, UAE, and a few other European and Asian countries in May.

In the case of China, the country's importers focused on buying high-quality thermal coal from South Africa due to political and trade tensions with its key coal supplier, Australia, whereas UAE buyers made coal purchases to divert it further to other countries.

Future scenario

In June, the South African coal export shipments are likely to increase further with India easing out restrictions and industrial activities ramping up.

Another push is likely to come from China which will continue to buy coal from South Africa amid supply disruptions from Indonesia and tensions with Australia. The strong demand from the power sector in Vietnam and reasonable export offers are likely to further support the country's coal demand from South Africa.

South Africa's coal export shipments during Jan-May

Quantity in MnT

*South Africa's export shipments to South Korea stand to be nil in first five months of 2020 as the latter imposed tougher restrictions on coal-fired power from December, halting nearly half of the country's 60 coal power plants by March as part of efforts to improve air quality.