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Richards Bay coal exports increase as prices strengthen

08 Mar 2013 16:26:52 | csd

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Coal exports from South Africa's Richards Bay Coal Terminal (RBCT) jumped by nearly 30% month on month in February, but fell year on year despite the month's supply problems in Colombia, according to data published by the terminal operator on Friday.

Stocks edged up month on month to 4.4m tonnes from 4.1m tonnes, as the port received 31% more coal during the month, reaching the terminal's highest end-of-month stock level since September 2011.

European buyers were expected to turn more to South Africa, as well as to the US and Russia, to replace lost supply from Colombia because of the various problems affecting production there.

But, even though they did show more interest, as indicated by the month-on-month jump in RBCT exports, it was subdued by the fact that South African prices were too high to justify transport into Europe.

So, while exports were higher month on month, they actually declined by 10% year on year despite a reduction in supply from Colombia to Europe from late January.

European utilities were said to be well stocked with coal, which might also have muted some of the need to buy more from markets such as FOB (free on board) RB.

On Thursday, the biggest disruption to coal supply from Colombia appeared effectively over as Sintracarbon, the union representing the striking workers of major coal producer Cerrejon, approved a new wage deal in principle. The final agreement has not been signed yet, however.

Sources said the FOB RB market was dominated by two main players from Europe during February. Indian and Chinese buyers showed some interest, but generally considered prices too high to actually buy cargoes.

Prices at the terminal's physical market climbed steadily throughout the month, with a March cargo sold at $88.40/tonne on 13 February, a level $3.30/tonne higher than a deal two days earlier.

A deal at the end of the month for an April-loading cargo indicated that prices had negun to ease off slightly.

Richards Bay upgrade

South African freight company Transnet said on Thursday that it is close to completing the pre-feasibility phase of a project to expand the port of Richards Bay generally and create a new coal terminal dedicated mainly to emerging mining companies.

The new terminal is expected to have capacity to export 14m tonnes annually, with 2020 earmarked as the year of completion.

RBCT has the capacity to export 91m tonnes of coal a year but is owned by large coal producers active in South Africa.

Nevertheless, the proposed investment project includes the upgrade of freight facilities that supply RBCT.

RBCT exported 68.3m tonnes last year, with rail problems affecting supply to the terminal. Fionn O'Raghallaigh

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