South Africa unrest threatens Cr, V logistics

Civil unrest in South Africa threatens to disrupt transportation and exports of some key minor metals and alloys, with market participants monitoring the situation closely in case conditions worsen.

Riots erupted in South Africa last week amid the arrest of former president Jacob Zuma, particularly in KwaZulu-Natal and Gauteng, home to Durban port. The unrest has endangered logistical routes to the city's docks from interior mining regions, with state-owned rail operator Transnet declaring a seven-day force majeure on 12 July, citing the unrest and in particular rail routes to Richards Bay being affected.

So far, most ferro-chrome and chrome traders say they are not particularly worried because port stocks in Durban are sufficient to keep exports running smoothly for the time being. A chrome producer said their "stocks [are] ok at the moment, [but] for how long, depends on how long this will go on for. Will there be short-term interruptions? Yes but for us, thus far, we have been able to get chrome to ports and I suspect this situation will die down as quickly as it flared up".

On the customer side, a stainless steelmaker said that for now "all our products are on schedule, even if it looks bad".

But not everyone is being left unscathed. A ferro-chrome producer who buys ore from South Africa told Argus there are "big" disruptions coming out of the region. "People can't get their hands on ferro-chrome," he said, adding that chrome ore offers are moving higher on "insane demand" for dry material.

Meanwhile, vanadium pentoxide buyers are also attempting to gauge the impact of the unrest on supply. Smaller domestic processing plants are likely be more affected by the highway disruption than larger exporters, a trader said, but for now he described the situation as a "manageable challenge".

So far, European prices for these products have not been affected, with market participants still digesting events and waiting to see if any shipment cancellations do occur. Cobalt buyers have voiced similar sentiments with regard to exporting the battery metal from the Democratic Republic of the Congo to Africa's southern ports.

Other commodity markets are also taking stock of the disruptions. Low labour turnout at Richards Bay because of the unrest was impacting its operations, thermal coal producer Thungela said. "This [low turnout] has negatively impacted on the port services to Richards Bay Coal Terminal (RBCT) with no vessel movement (onto and off berths) over the last 24 hours. Thus while RBCT is in a position to load, there are no new vessels loading for now."

In the oil sector, BP and Shell's South African joint venture Sapref has shut its 180,000 b/d Durban refinery and declared force majeure on the supply of all products.

By Yusuf Khan and Sian Morris