Drummond's total loadings rose by 667,000t on the year and by 512,000t on the month to 2.89mn t in May. The mining company shipped 14.1mn t in the first five months of 2021, up from 13.5mn t over the same period last year.
Drummond shipped a multi-year high of 615,000t for Chile in May, which was up by 233,000t on the year and reversed some of the steep losses recorded in January and April. The growth meant January-May exports to its South American partner were down on the year by only about 100,000t, at 1.34mn t.
The closure of some Chilean mines, including the 2mn t/yr Mina Invierno site, has sustained the country's import demand, despite lower power-sector consumption. Supply issues at fellow Colombian mining firm Cerrejon in February and May also could have driven an uptick in Chilean purchases from Drummond.
But China remained the key driver of year-on-year growth in Drummond's cumulative 2021 sales, as loadings continued for a sixth consecutive month. Drummond shipped 187,000t to China in May, up from zero a year earlier, bringing the January-May total to 1.8mn t.
This is more than the 1mn t loaded for China in all of 2020 and makes the country Drummond's second-biggest export market so far this year, behind only Turkey.
China's informal ban on Australian imports has forced buyers to turn to other origins for alternative supplies, including Colombia and South Africa, in recent months. An unusually wide fob Newcastle premium to the cif Amsterdam-Rotterdam-Antwerp (ARA) market for NAR 6,000 kcal/kg coal has further fuelled an expansion of Colombian shipments to the Pacific.
Argus' NAR 6,000 kcal/kg fob Newcastle assessment averaged a premium of more than $16/t over the cif ARA market in May, up from $12.50/t a year earlier.
Drummond's exports for Japan and South Korea both grew on the year by about the size of a Capesize shipment in May and overall flows for northeast Asia in January-May were up by 340,000t on the year, to 3.6mn t.
Drummond is well placed to capitalise on any increase in demand in Asia — or elsewhere in the Atlantic — as fellow producer Prodeco remains off line as Glencore seeks to hand back its mining titles and as Cerrejon has recently suffered rail transport disruption because of protests and blockades.
Turkish loadings ease
Drummond's shipments to Turkey — the largest importer of Colombian coal — fell by a quarter on the year to 503,500t in May. This is particularly striking given the rail transport disruption at Cerrejon that will have also curbed exports to Turkey last month.
Turkish coal-fired generation edged higher in May, but the upside was capped by ongoing power plant maintenance, which has been particularly disruptive this year after works were shortened or deferred in 2020 during the pandemic.
And the outlook for coal-fired generation has weakened recently, as soaring coal prices have made natural gas increasingly competitive for power generation.
Other notable changes to Drummond's exports in May included a 100,000t rise to Brazil, where the economy is expected to grow by 3pc this year after sinking by 4.1pc last year, according to analysts. Loadings for Europe dipped, as exports to the Netherlands fell to zero from 170,000t a year earlier, which was offset only partly by a 116,000t rise to Poland.
Production set to increase
Drummond's production rose by 157,207t on the year to 2.36mn t in May, propelled by rising output at the El Descanso mine.
El Descanso produced 1.69mnt in May, up by 198,700t on the year. Drummond's new mine, El Corozo, produced 48,652t in May, its third month of operations, while La Loma's output fell by 90,000t from May 2020.
Drummond's president, Jose Miguel Linares, recently said the company expects to produce 31.5mn-33mn t of coal in 2021, near levels achieved before the Covid-19 pandemic. After 12.7mn t was produced in January-May, this implies average output of 2.7mn-2.9mn t throughout the remainder of this year. Drummond produced 2.8mn t/month in June-December 2020.
Output fell to 29.3mn t last year from 32.7mn t in 2019 as global demand faltered and owing to logistical and Covid-19-related disruptions.
