Transnet force majeure unlikely to impact South African thermal coal prices

Transnet SOC Ltd., South Africa's state-owned port and rail freight operator, declared and lifted a short-lived force majeure after a power failure affected the Coal Line section between Halfgewonnen C and Hamelfontein stations from Oct. 10 to Oct. 11, Transnet Freight Rail, a division of Transnet, said in an email response to Platts, part of S&P Global Energy, Oct. 13.

The disruption was caused by a power failure from state-owned utility Eskom, impacting the train operations between Ermelo and Ogies, Transnet said in a notice dated Oct. 11 seen by Platts. "This incident has disrupted planned train slots, as train crews were redeployed to relieve trains within the affected section and ensure the safety of assets," the company said.

Service to Richards Bay Coal Terminal resumed on Oct. 11, following a suspension of operations on Oct. 10, Transnet Freight Rail said in the email response to Platts. "The impact of the power failure translated to a total loss of 21 Export Coal trains, which equates to a volume loss of 174,300 mt."

The incident follows an earlier derailment between Overvaal and Sheepmoor on Aug. 21, in which a train en route to Richards Bay derailed on Line 1, resulting in a double line closure and disruptions along the coal line. A separate derailment on June 8 had impacted Lines 2, 3, 4 and the Empangeni line.

"The focus on 61 million mt for 2026-27 and 70 million mt for 2028-29 is fairly reliable because that is based on our existing plan," Dr. Andrew Shaw, Chief Strategy and Planning Officer at Transnet, told Platts in an earlier interview. The target is central to South Africa's attempt to restore confidence in its coal export chain after years of underperformance marked by derailments, cable theft, locomotive shortages and network instability, Shaw said.

Market participants expected limited price impact from the latest incident, with steady demand and firmer global seaborne prices seen as the key market drivers. "There was a slight disruption in electricity supply, but nothing serious. I don't see any upward pressure on prices," a South Africa-based producer said.

Firm Asian demand anchors prices

The disruption occurred against a backdrop of steady buying interest from the Asia-Pacific region, particularly India, the largest importer of South African coal, with participants continuing to seek spot tonnages in the seaborne market.

Platts assessed FOB Richards Bay 5,500 kcal/kg NAR coal at $112.05/mt on Oct. 13, with the marker averaging $109.76/mt FOB so far in October, compared with an average of $68.67/mt FOB during H1 October 2025.

"For South African coal, there is strong demand from India -- both from the power and the sponge sector. Domestic coal is either not available or very costly, so that is supporting imported coal prices," an India-based buyer said. "Demand from the sponge sector is strong, and increasing actually, because they are only reliant on South African coal because of its specifications."

Latest data from S&P Global Commodities at Sea showed India imported 2.27 million mt of South African coal in September, up from 1.43 million mt in August but still down 15% from September 2025.

Indian sponge iron -- or direct reduced iron -- manufacturers had been inactive in the seaborne market for an extended period. Post-monsoon restocking, coupled with curtailed domestic coal production, drove a significant revival in appetite for South African-origin coal.

Another South Africa-based producer noted that while the market awaited further clarity on the disruption, a significant direct impact on prices remained unlikely. "I believe it's not going to have much overall impact."

"No major impact is expected because of this incident, should not affect the prices as such as well," an India-based trader said, echoing the sentiment.