In the first five months of 2022, South Africa exported 29.4 MMT (+2.7 MMT/+10% y-o-y) coal. With a total ban on Russian coal imports to Europe imminent, South Africa is benefiting from buyers of coal from the Continent and Mediterranean competing for its high-quality thermal coal. Coal prices in South Africa have maintained an upward trajectory as exports to the Continent/Mediterranean/North Africa have soared from a mere 0.2 MMT (all to the Netherlands) in the first five months 2021 to 6.1 MMT in the corresponding period this year. So far this year Netherlands has imported 1.8 MMT but a raft of other countries have bought from South Africa for the first time in many years. Perhaps the most eye-catching is Morocco (1.6 MMT) but France and Italy both 0.6 MMT as well as Germany (0.4 MMT), Spain (0.3 MMT), Belgium (0.3 MMT) and Poland (0.2 MMT) are actively purchasing South African coal.

To illustrate the change in coal purchasing patterns, China has stepped back from buying product from South Africa; last year China (as South Africa’s third largest market) imported 6.6 MMT coal and to date remarkably has not purchased a single tonne of South African coal. In addition, South Africa’s second largest export market, Pakistan (12 MMT in 2021), has significantly reduced cargo inflow at only 2.3 MMT to date down 3.4 MMT (-59%) y-o-y for the first five months, preferring instead to buy much cheaper coal overland from Afghanistan which at present exports 0.6-0.8 MMT per month overland to Pakistan.

India remains South Africa’s principal export market with shipments in the five months to date down only 0.5 MMT y-o-y at 11.5 MMT, though with Transnet, South Africa’s rail operator suffering from several logistical challenges through cable thefts and industrial disputes, some smaller South African coal producers are now looking to export out of Mozambique thus boosting coal shipments to this neighboring country from minimal quantities in the early part of last year up to 2 MMT to May this year, catapulting Mozambique to South Africa’s third largest market! Exports to South Korea at just below 2 MMT and Taiwan at 0.9 MMT are also significantly ahead of where they were last year after five months to both countries.

The increase in South African backhaul coal exports has also led to more cargo shipped in larger tonnage with Capesize shipments in the five months to date up 2.4 MMT (+16%) y-o-y at nearly 17 MMT; shipments in Panamax tonnage have also doubled at 4.7 MMT at the expense of the Ultra-Supramax sector, down 2 MMT y-o-y at 2 MMT. Larger cargo stems have reduced the number of stems from South Africa though not it seems congestion at Richards Bay which remains high though with more tonnage generally coming open in the Atlantic, 2022 has been notable for less imbalances of tonnage thus the outbound premiums in most vessel sectors have

gradually been eroded as the year has progressed.