The energy complex has been marginally stronger with carbon prices rallying strongly again. A major problem now for both South African and Australian producers are the high fixed take-or-pay costs they incur for rail, as well as port access.

This often means continuing production at a loss, with port stocks building up waiting for better market conditions. This glut could force the market lower in the meantime.

In Asia, Mongolian exports over the border to China has also been growing significantly in recent weeks, playing catchup on shipments halted by Covid-19.

In India, UN Secretary-General Antonio Guterres has warned the country to “end its reliance on polluting, financially volatile and costly fossil fuels”.

Within South Africa, our research shows to expect a coal supply cliff around 2030 as domestic coal power demand, combined with flat exports at around 75 Mtpa, will most likely outstrip available coal supply. Export prices won’t necessarily rally on this, being driven by external factors, and the impact will be felt mostly in the domestic coal market, where dark spreads will come under severe pressure.