Islamabad April 22 2022: Thermal coal buyers in Pakistan are looking for a substitute of the South African material as prices of the fuel have remained elevated since early 2022 and an imminent power crisis has created a higher-than-usual domestic demand, market sources told S&P Global Commodity Insights in the week to April 21.
Sources said Pakistan is looking at countries like Afghanistan and Tajikistan given the significant price difference compared to the South African coal, which accounts for around 70% of Pakistan’s imports.
The country is also looking at other sources like Mozambique, meanwhile, as power plants and cement manufacturers grapple with insufficient stocks.
“Pakistan has been importing from Afghanistan … due to lower prices. The high-CV 6,000 kcal/kg NAR coal turns out to be almost $50-$60/mt cheaper than the South African coal,” a Pakistan-based trader said.
According to data from S&P Global, the price of South African 5,500 kcal/kg NAR coal rose 156.35% from $107.45/mt FOB on Jan. 4 to $275.45/mt FOB April 20.
CFR Pakistan thermal coal 5,750 kg/kcal NAR reached a historical high on March 2 at $457.95/mt, up $127.95 on the day. This is the highest the price has been assessed at since S&P Global started collecting data on June 1, 2020, when the price was $61.50/mt.
Supply from South Africa has remained tight since late last year due to civil unrest in the country. The situation was further aggravated this year as European demand poured in to replace Russian tonnages banned by the EU to protest Moscow’s invasion of Ukraine.
The latest data available from World Trade Statistics showed South Africa supplied 839,322 mt to Pakistan in December 2021, down 13% on the month and 32% on the year.
Imports from Indonesia were at 104,858 mt in December 2021, up 1% on the month and down 55% on the year, while supply from Australia significantly dropped to a mere 377 mt, down from 113,552 mt in November 2021 and lower from 224,613 mt in December 2020.
“A lot of textiles players have switched to coal. The power sector is still buying coal and cement is using a mix of other imported and Afghanistan material. Afghanistan’s material is still coming in steady,” a Pakistan-based source said.
Market participants estimated Pakistan annual demand to be around 16 million mt. Over the past six months, about two million mt of Afghanistan coal was heard being bought by the country.
