Coal stocks at the Richards Bay Coal Terminal (RBCT) inched up by 5pc on the week through to 1 September to 3.37mn t, as a lack of spot demand kept exports limited to term-contracted volumes.
State-owned rail operator Transnet Freight Rail (TFR) supplied 1.23mn t on the week, against average weekly rail shipments of 913,169t so far this year. TFR has been mired with allegations of underperformance for most of the past few years, but volumes by rail to RBCT have been recorded as above average since TFR's annual maintenance shutdown was lifted on 1 August.
A spell of weak demand for South African coal is capping export deliveries despite sufficient stocks and healthy rail shipments to RBCT.
Exports were recorded at 1.07mn t, up from just 738,000t last week, and market participants suggest most cargoes being exported at the moment were booked months in advance.
Argus' fob Richards Bay NAR 6,000 kcal/kg assessment averaged $114.50/t for August, at which point price-sensitive buyers withdrew from the spot market. A major Indian sponge iron utility said it was economic to buy spot when fob prices were below $105/t.
India constitutes about 40-50pc of total South African exports, but the dynamic has shifted in recent weeks because sufficient stockpiles of coal at Indian ports have reduced the urgency to buy fresh shipments.
India's domestic steel and sponge iron prices had also been dampened by imports of cheap finished steel from China and Vietnam, which was curbing production volumes and as a result coal consumption.
This has seen South Africa's export mix for the past three weeks diversify with smaller volumes bought by other markets.
About 229,000t of thermal coal left for India on 26 August-1 September. This was followed by deliveries of 218,000t to the UAE and 166,000t to South Korea. Panamax vessels also left the RBCT for Sri Lanka, Bangladesh, Japan and Kenya.
South African prices for NAR 6,000 kcal/kg coal fell on Tuesday to $110.63/t, touching these levels for the first time since 23 July, based on Argus assessments. But this will prompt spot buying only if the current price levels are sustained or if they edge lower.
Meanwhile, rates for Capesize vessels from Richards Bay to Rotterdam look more favourable as European coal prices maintain their rally. Europe's winter restocking demand for high-calorific-value coal could offer relief to South African sellers contending with a lag in demand.
