S African rail disruption may last until 7 May

Disruption to South African coal exports could linger until 7 May, longer than many participants were expecting, owing to a derailed train.

An update from operator Transnet Freight Rail this morning said four of the 44 derailed trucks have so far been cleared near Hammelfontein, and that around 72 hours are needed to clear the remaining 40.

"Once these have been cleared, then repairs to the line will commence and the current indication is that all repairs are expected to be completed on around 7 May," the notice said.

Several market participants said this timeframe is longer than they initially expected, with one saying that the news will lead to a rise in API 4 prices.

The train derailed between the mining regions and Hammelfontien, near Ermelo, at around 14:00 local time on 28 April, and both coal lines have since been closed. Coal stocks at the Richards Bay Coal Terminal were around 3.3mn t before the derailment.

On 29 April, participants were hopeful that the issue could be resolved by early next week, but this looks increasingly unlikely.

API 4 paper and physical prices have rallied since the derailment. Argus' NAR 6,000 kcal/kg fob Richards Bay prompt assessment rose to $95.50/t yesterday, up by $5.41/t from the 27 April close. In the paper market, the API 4 May contract settled at $92.05/t on 29 April, up from $86.85/t two days earlier.

By Alex Thackrah