[ferro-alloys.com]Cobalt exports are expected to be negatively impacted by South Africa's 21-day nationwide lockdown, with sea ports remaining open only for essential cargoes like medical and food supplies.
South Africa started the lockdown at midnight on March 26 in a bid to halt the spread of the coronavirus in the country.
The country's Minister of Transport, Fikile Mbalula, said on Wednesday that "essential cargo" would still be allowed at South Africa's eight sea ports, although cargoes from high risk countries will have to be sanitized, with no crew interchanges allowed.
He added that port operations would be reduced to a minimum, prioritizing medical and food supplies.
According to letters to customers seen by S&P Global Platts, state-owned logistics operator Transnet had decided on Tuesday to close all its bulk terminals for mineral and mining commodities. Platts has contacted Transnet to confirm these closures but has yet to receive a response from the operator.
Separately, Minster of Mineral Resources and Energy Gwede Mantashe said on Wednesday that in the case of export of mined commodities, "each case will be evaluated on its merits."
One cobalt miner source told Platts that cobalt exports out of South Africa were "shut completely."
The mostly landlocked Democratic Republic of Congo, where the bulk of the world's cobalt is mined, transports its cobalt via neighboring African ports including South Africa's Durban port and Tanzania's port of Dar es Salaam.
According to the United Nations' Comtrade data, South Africa exported 105 mt of cobalt ores and concentrates in 2018 and 22.5 mt of cobalt oxides and hydroxides. In the first nine months of 2019, it exported 72.4 mt of cobalt oxides and hydroxides and 75.8 mt of cobalt ores and concentrates.
One trader said he expected supply tightness due to the coronavirus to "create an upward pressure for cobalt and intermediate product prices in the near term."
However, other market sources said Chinese inventories are still sufficient and the prevailing weak demand would likely soften the impact of the tightness in supply.
"There wouldn't be any issue for a few months. That being said, Dar es Salaam, Tanzania port is still operational. Demand is poor, so basically there is no effect," a battery maker source said. "Cobalt producers are suffering losses recently with cash flow issues, might use this opportunity to increase prices."
However, he added that raising prices may not be a "wise move" during this uncertain period.
"At the moment, many people should be struggling with the question of whether to long cobalt or not," the source said.
A cathode maker source said there was no cause for concern as, "cobalt metal can be recycled to add to the supply and there's enough port stocks. There is no need to panic," he said.
Other commodities to be impacted
Meanwhile, exports of other commodities out of South Africa are also expected to be impacted by the lockdown.
A Chinese ship charterer from a trading house said he had heard that trains transporting iron ore from mines to the port of Saldanha Bay port had been cut off.
"But they would try to load cargoes for nominated ships," he added. "Manganese cargoes will not move as Saldanha Bay and Port Elizabeth are shut," another ship-operator said.
South Africa's Mbalula had said that all long-distance passenger rail services, both public and private, would stop operations during the lockdown, but he did not specify whether this includes railing cargo.
Platts reported Thursday that South African iron ore miner Assmang had declared force majeure on some of its contracted shipments due to the bulk terminal closures, while Kumba Iron Ore had not yet announced any disruptions.
A ship operator said loading at Richards Bay Coal Terminal was still ongoing.
"At RBCT, they are trying to load the nominated ships. The port has 3.7 million mt of cargo and only 1 million mt of backlog, so they can still load 2.7 million mt," he said.
Mantashe said all mining operations in the country would be scaled down significantly, although mines supplying coal to state-owned power supplier Eskom would remain in operation, albeit at reduced production levels.
(S&P Global Platts)
- [Editor:王可]
Tell Us What You Think