API 4 coal swaps rally on train derailment

A derailed train supported API 4 paper during afternoon trading today, while the API 2 curve edged up on wider strength in the regional energy complex.

A train derailed on the line to South Africa's Richards Bay Coal Terminal at about 14:00 local time (12:00 GMT) today.

Officials from operator Transnet were en route to assess the damage this afternoon but no indication of the duration of the disruption was known by the time of publication. Both rail lines into Richards Bay were closed this afternoon, while stocks at the export port are around 3.3mn t.

As a result, API 4 prompt swaps and the physical market rose sharply in afternoon trading. After trading at around $87.50/t just around midday UK time, the May swap eventually settled at $89.80/t, up by $2.95/t from the previous close.

Similarly, Argus' fob Richards Bay NAR 6,000 kcal/kg prompt physical assessment rose by $2.59/t on the day to $92.68/t.

The rail disruption adds to railing woes that have dogged the South African coal network for much of this year. But it does not alter the underlying concerns surrounding weak demand from key market India, where rising Covid cases are subduing demand.

Strength in regional gas, power and carbon prices supported Europe-delivered coal contracts and the API 2 front-year contract closed above $75/t for just the second time in two years. The last sustained spell of front-year cif ARA paper coal pricing above $75/t was in early 2019.

Separately, Colombia's mining regulator ANM is expected to make a decision next week over mining firm Prodeco's request to return its mining titles to the government. The eventual return of the titles would allow the government to press on with finding a new lessee for the unit.