Bulk Shipping Watch Newsletter – March 2023

March 2023

Iron Ore & Steel

China’s current iron ore strength may be as good as it gets for 2023

Source: Reuters
The risks to the bullish drivers of the spot iron ore price are rising as the market starts to question the nature and strength of China’s economic recovery, while the chances of a global economic hard landing mount. Benchmark 62% iron ore for delivery to north China , as assessed by commodity price reporting agency Argus, ended at $121.60 a tonne on Wednesday, a two-month low. The price has dropped 8.8% since hitting $133.40 a tonne on March 15, which was the highest since June last year. FULL STORY

China’s 2023 iron ore output hit 8-year high

Source: Reuters
China’s annual iron ore output is set to hit an 8-year high at 290 million tonnes, analysts said on Wednesday, after the world’s top metals consumer lifted tough COVID measures that had impacted mining and as new capacity came online. The production, highest since 2015, supports Beijing’s plans to reduce its dependence on imports of the steelmaking raw material, typically around 1 billion tonnes each year. Local supply will rise by 7 million tonnes, or 2.4%, from a year earlier, to 293 million tonnes, Xiao Wei, director of iron ore research at consultancy Mysteel, told a conference in Qingdao on Wednesday. Full STORY

Iron ore prices fall amid China’s curbs on steel production

Source: GMK Center
May iron ore futures, the most traded on the Dalian Commodity Exchange, for the week of March 17-24, 2023, fell by 6.4% from the previous week – to 866.5 yuan/t ($126.43/t). Thus, iron ore quotations are down for the second week in a row after reaching an 8-month high. This is evidenced by Nasdaq. China’s iron ore prices are falling after the country’s government said it intends to introduce measures to curb a sharp rise in iron ore prices to remove speculation in the market. China’s National Development and Reform Commission (NDRC) Price Monitoring Center surveyed the country’s ports last week to assess raw material stocks and determine the need for special measures to control commodity prices. The agency warned traders against stockpiling and overpricing. Despite this, iron ore prices continued to hold high, but the trend reversed after the Chinese government announced restrictions on steel production in the country’s major industrial cities amid high levels of air pollution. FULL STORY

China’s steel scrap imports in 2023 may not breach 1 mil mt mark

Source: S&P Global

China’s steel scrap imports may not be able to go past the 1 million mt mark in 2023 because of higher quality standards that limit available supplies, analysts said March 24. China Iron & Steel Industry Association (CISA) recently urged the state to relax rules targeting imported steel scrap to help boost imports into the country, a move which could help reduce scrap sourcing costs. In 2021, China revised quality standards for the scrap sector, requiring impurities in scrap to not exceed 0.3%-1% for three different grades. These higher standards affected the use of imported scrap resources, as availability of compliant material was limited in global markets, according to the CISA. If imported steel scrap does not meet quality standards, it can be deemed as solid waste imports, leading to cargo repatriation risks, or breaching of rules, sources said. FULL STORY

Iron ore price rises on improving China steel margins

Source: Mining
The iron ore price climbed on March 13th as improving profitability of steel mills and demand outlook in China lifted sentiment. Benchmark 62% Fe fines imported into Northern China rose 2.25%, to $132.51 per tonne. The rapid rise in steel mills’ profits and their output expansion have boosted iron ore demand, Sinosteel Futures analysts said in a note. The overall blast furnace capacity utilization rate edged up for the ninth straight week, rising another 0.89 percentage point on week to 88.03% over March 3-9. FULL STORY

China’s steel demand is set to slow. That could dent iron ore prices by nearly 30%

Source: CNBC
Iron ore prices could fall as much as 28% by the end of 2023 as China’s steel demand and output are set to fall, experts forecast. Morgan Stanley analysts say iron ore prices will fall and cited subdued production from the world’s leading steel producer China, as well as the country’s turn toward steel scrap. Our 2H23 base case forecast is $90 per ton,” a report commodities strategist Marius van Straaten and a team said in a March 20 report. That’s about 28% lower than the current $126 per ton for benchmark 62%-grade iron ore. Iron ore is primarily used to make steel, an important material in construction and engineering projects — and both Asian nations are on track to consume more. FULL STORY


China’s Q1 coal imports jump to new highs as factories throttle up

Source: Reuters
China’s imports of thermal coal in the opening quarter of 2023 have soared to new highs as utilities and businesses restocked in anticipation of greater energy use following the easing of strict zero-COVID policies that curbed coal demand in 2022. Total thermal coal imports through March soared 81% from the same period a year ago to 65.7 million tonnes, according to ship-tracking data from Kpler. Coal ports along China’s south and east coasts accounted for more than 45 million tonnes of the total imports, revealing sharp rises in demand along the country’s main manufacturing corridors. FULL STORY

China’s new coal plants set to become a costly second fiddle to renewables

Source: Reuters
China’s plans for some 100 new coal-fired power plants to back up wind and solar capacity have sparked warnings that the world’s second-biggest economy is likely to end up lumbered with even more loss-making power assets. Analysts question the logic of policies that intend to reduce the role of the dirtiest fossil fuel but at the same time require more coal-fired power plants to be built – especially given that only a small number of older plants are typically retired each year. FULL STORY

China gives new backing to coal even as clean energy accelerates

Source: Bloomberg
China signaled coal will retain its role as the country’s mainstay fuel even as the government continues to support the expansion of its world-leading clean energy industry. The nation that mines and burns more than half the world’s coal will keep supporting the fuel, while targeting more efficient consumption and advanced production techniques, according to government reports released Sunday at the start of the National People’s Congress. In a speech in Beijing, Premier Li Keqiang highlighted the role coal played in ensuring energy supplies and keeping domestic prices at comparatively low levels last year despite global inflation. FULL STORY

China stands almost alone in expanding its coal power fleet

Source: Bloomberg
China is zigging while the rest of the world is zagging when it comes to coal power. Beijing rapidly accelerated plans for new coal power plants in the second half of last year, increasing its pipeline by 45% to 250 gigawatts, according to a report from London-based climate think tank E3G. Meanwhile, planned power plants in the rest of the world shrank by 10 gigawatts, leaving China accounting for 72% of the world’s future projects. FULL STORY

China’s hunger for coal sparks debate on self-sufficiency and imports

Source: S&P Global
China’s growing energy needs on the back of a post-COVID economic recovery has put the spotlight on coal, but whether it will come from higher imports or a more aggressive domestic production remains debatable.While some analysts believe that rising domestic output will be sufficient to cater to the coal requirements this year, others think that an increase in imports is inevitable. FULL STORY


Spot soybean CFR China basis finally finds bottom

Source: Fastmarkets
The soybean CFR China basis premium appears finally to have found a bottom, at least for near-term cargoes, after falling to historical lows this month.Record lows were reached on ample supplies out of Brazil and lackluster demand from the world’s biggest soybean importer, while more stable FOB levels and a pick-up in freight have provided a floor to the market. FULL STORY

China rolls out policies to stabilize soybean production

Source: Xinhua
China has rolled out a raft of policy measures to stabilize soybean production this year, according to the country’s agricultural ministry on Thursday.The policy mix, introduced by several departments under the coordination of the Office of the Central Rural Work Leading Group, covers multiple aspects of soybean production, the Ministry of Agriculture and Rural Affairs said. FULL STORY

China soybean imports expected to increase

Modest growth in the animal protein sector is expected to raise China’s soybean imports to 97 million tonnes in the 2023-24 marketing year while the country’s removal of COVID-related restrictions is expected to boost overall oilseed consumption, according to a Global Agricultural Information Network report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture (USDA).The report noted that, based on data from the General Administration of Customs China, imports surged following the government’s removal of zero-COVID-19 policies in December, reaching a combined 16.2 million tonnes in January and February, a 16% year-on-year increase. China is projected to import 96 million tonnes of soybeans in 2022-23. FULL STORY

China’s Grain Imports Reach Record With a Growing Reliance on Brazil

Source: Gro Intelligence
China’s soaring import volumes of grains and soybeans continued into 2023, with Brazil for the first time contributing a double-digit share of corn shipments. With China seeking to diversify food purchases away from the US, the Asian country is expected to increasingly rely on Brazil to meet its growing import demand.China’s grain imports have been rising strongly for years, and corn imports are up more than twentyfold since 2010. In February of this year, imports of both corn and wheat reached record volumes. Corn shipments for the month were up nearly 60% from a year earlier, with the US accounting for nearly 40% of the total and Ukraine and Brazil each representing about a one-quarter share. FULL STORY

China soybean prices set new low amid higher Brazil output, bearish sentiments

Source: UkrAgroConsult
Chinese soybean prices have continued its downtrend in the week to March 22, with the basis to CBOT futures hitting a new lowest level since 2018, amid higher crop forecast in Brazil and lower demand coverage for nearby shipments.Platts, part of S&P Global Commodity Insights, assessed CFR China soybean M1 basis down 13 cents/bu at 67 cents/bu over May CBOT on March 22, representing a 16% drop on the day. FULL STORY

China’s soybean market official open to foreign traders

Source: ChinaDaily
Eight soybean-related futures and options, including No 1 Soybean, No 2 soybean, soybean meal and soybean oil, are officially open to foreign traders at the Dalian Commodity Exchange on Monday in Dalian, Liaoning province.“It is the first time for the DCE to introduce overseas traders in the full soybean commodities,” said Fang Xinghai, vice chairman of China Securities Regulatory Commission, in a video message. FULL STOY

China buys 70% of Brazil’s soybean exports

Source: AgNews
The Brazilian president was scheduled to meet with his Chinese counterpart this week in Beijing to discuss bilateral trade issues, but President Lula had to cancel his participation due to a case of mild pneumonia. His trade team, including the Ministry of Agriculture, will continue with the trade mission and meet with President Xi Jinping.Relations between the two countries is symbiotic, China needs Brazil’s commodities and Brazil needs China’s business. China is the destination of over one-quarter of Brazil’s exports accounting for more than 90 billion dollars in 2022. Brazil has a balance of trade surplus of 30 billion dollars with China, which is half of its trade surplus. FULL STORY

US: China soybean prices set new low amid higher Brazil output and bearish sentiments

Source: TRIDGE
Chinese soybean prices have continued its downtrend in the week to March 22, with the basis to CBOT futures hitting a new lowest level since 2018, amid higher crop forecast in Brazil and lower demand coverage for nearby shipments.Chinese soybean prices have continued its downtrend in the week to March 22, with the basis to CBOT futures hitting a new lowest level since 2018, amid higher crop forecast in Brazil and lower demand coverage for nearby shipments. FULL STORY

China’s soybean imports from US up 15% in first two months

China’s soybean imports from the U.S. rose 15.4% in the first two months of the year compared with 2022, data showed on Monday, as delays to the harvest in top supplier Brazil prompted buyers to seek more beans from the U.S.The world’s top buyer of soybeans, China brought in 11.59 million tonnes of the oilseed from the U.S., up from 10.04 million tonnes a year ago, data from the General Administration of Customs showed. FULL STORY


Rosneft, CNPC discuss bilateral cooperation matters

State-run energy company CNOOC purchased a shipment of LNG from Total Energies through Shanghai Petroleum and Natural Gas Exchange. China has completed its first purchase of LNG using cross-border yuan settlement, state-owned China Daily reported on March 29. FULL STORY

China’s LNG imports down 12% in January-February

The pipeline gas import volumes during the January and February were down 5.2% yr/yr.Chinese LNG imports in January and February came in at 11.12mn metric tons, down 11.9% year/year, customs department data published on March 20 said. FULL STORY

China 2023 gas demand likely to grow, but LNG outlook cloudy- petrochina intl exec

Natural gas demand in China is likely to grow this year as the economy recovers, but whether the country’s imports of liquefied natural gas (LNG) rebound will depend on spot prices, an executive of PetroChina International said.TOKYO, March 3 (Reuters) – Natural gas demand in China is likely to grow this year as the economy recovers, but whether the country’s imports of liquefied natural gas (LNG) rebound will depend on spot prices, an executive of PetroChina International said. FULL STORY

Philippines to resume talks with China on joint oil, gas exploration in West PH Sea

Source: Global Times
The Philippine government and China are set to resume exploratory talks on a possible joint venture for oil and gas exploration in the West Philippine Sea, said Foreign Affairs Secretary Enrique Manalo.In an interview, Manalo said the talks would begin on a technical level in about six weeks. FULL STORY

China’s natural gas output up 6.7 pct in first two months

China’s natural gas output logged steady growth in the first two months of 2023, data from the National Bureau of Statistics shows.The country produced 39.8 billion cubic meters of natural gas in the period, up 6.7 percent from a year earlier, according to the bureau. FULL STORY

PetroChina sees China’s fuel demand rising 3% in 2023 vs 2019 – exec

China’s refined fuel consumption this year is likely to grow 3% from pre-COVID levels in 2019, and that of natural gas by about 5.5% from 2022, state energy giant PetroChina said on Thursday. New energy, such as wind, solar and thermal power, is expected to account for 7% of the group’s total output portfolio by 2025, the company told an earnings briefing. FULL STORY

China’s 2023 crude oil imports set for 6.2% rise, but risks prevail

Source: Reuters
China’s crude oil imports will average 10.8 million barrels per day (bpd) in 2023, matching the previous record high from 2020, according to the think tank of the country’s leading energy group.Imports will rise 6.2% from last year to 540 million tonnes, while refinery processing will gain 7.8% to 733 million tonnes, equivalent to 14.66 million bpd, China National Petroleum Corporation’s Economics and Technology Research Institute (ETRI) said in its annual industry outlook released on Monday. FULL STORY

Russia now China’s biggest oil supplier – Reuters

Russia became China’s largest oil supplier in the first two months of 2023, overtaking Saudi Arabia, Reuters reported on Tuesday, citing data from Beijing’s General Administration of Customs.Crude deliveries from Russia amounted to 15.68 million tons in January-February, roughly 1.94 million barrels per day (bpd). It marked a 23.8% increase compared to the same period in 2022. FULL STORY

China ramps up fuel oil imports blended from Russian crude – media

Independent Chinese refineries are boosting purchases of discounted fuel oil blended from Russian barrels, Reuters reported on Friday, citing latest data and trade sources.Sanctions imposed by the EU and the Group of Seven on Russian crude, including the looming embargo and price cap on refined products that comes into force on February 5, have sent the barrels eastward and at deep discounts. FULL STORY