August 2023
Iron Ore & Steel
Iron Ore’s Unexpected Rally Shows Pockets of China Strength
Source: Bloomberg
Iron ore climbed to its highest in a month after a rally that has defied deepening gloom over China’s debt-laden economy. Prices have largely kept above the key $100-a-ton threshold this year despite waves of worrying news from the real estate sector, which in more normal years makes up about 40% of demand. The absence of a price crash or devastating slump in steel demand illustrates how pockets of China’s economy are holding up despite the negative headlines. There are still plenty of risks ahead for iron ore, not least the prospect of a prolonged slump in the property sector. But relatively robust prices offer a counterpoint to the prevailing bearish mood across Chinese markets. FULL STORY
Iron ore rally defies gloomy Chinese economic outlook
Source: Reuters
Iron ore prices have rallied despite flagging steel demand from the ailing Chinese property sector as Chinese mills maintain output in the absence of a firm government production cap and replenish low inventories of the raw material. The rising prices are a boon for global miners such as Vale and BHP and bolsters BHP’s view from last week that China, the world’s biggest iron ore consumer and steelmaker, will still produce more than a billion tons of steel this year. The surge runs counter to recent lacklustre Chinese economic data and is occurring even as companies in the property sector, the biggest steel end-users, contend with debt and cash flow issues. FULL STORY
Iron ore prices fall amid China’s curbs on steel production
Source: GMK
September iron ore futures, the most traded on the Dalian Commodity Exchange, for the July 28-August 4, 2023, fell 5.1% from the previous week – to 810.5 yuan/t ($112.7/ t). This is evidenced by Hellenic Shipping News’ data. As of August 4, 2023, on the Singapore Exchange, quotations of basic September futures fell by 11.2% compared to the price a week earlier – to $99.7/t. Iron ore prices in China began to fall last week amid concerns about threats to curb steel production in the country and a lack of economic stimulus from the government. Chinese steelmakers have sharply reduced capacity utilization and production rates in response to a combination of government-imposed restrictions and the imminent arrival of Typhoon Doksuri on China’s southern coast,» commented Atilla Widnell, director of Navigate Commodities. Recently, some Chinese steel companies were instructed to limit steel production until the end of the year, so that annual figures remain at the level of 2022. FULL STORY
China increased iron ore production by 8% y/y in July
Source: GMK
In July 2023, China increased iron ore production by 8% compared to July 2022 – up to 85.7 million tons. SteelOrbis informs about it citing data from the National Bureau of Statistics of China (NBSC). Compared to June 2023, production increased by 0.6%. In January-July 2023, iron ore production in China amounted to 566.8 million tons, which is 6.5% more than in the same period of 2022. In July, prices for these raw materials in the country increased, and subsequently fluctuated at fairly high levels. At the end of the month, iron ore quotations fell due to the impact of typhoons Doksuri and Hanun. FULL STORY
China’s iron ore imports may hold up despite gloomy economy
Source: Reuters
A swathe of poor economic data in China is putting pressure on the price of iron ore, which is struggling to hold above the key psychological level of $100 a metric ton. However, the run of soft indicators in China’s embattled property sector has yet to translate into a significant decline in the volume of imports of the main raw material used to make steel. Commodity analysts Kpler and Refinitiv are estimating that August imports will top 100 million metric tons, which would be the first time this has happened since March’s customs figure of 100.23 million. Kpler is estimating that China, which buys about 70% of global seaborne iron ore, will see imports in August of 108.5 million metric tons, while Refinitiv has a more conservative 100.8 million. While these figures are likely to be revised as more cargoes are assessed, it is likely that iron ore imports will rebound from July’s official 93.48 million metric tons, which was the lowest since April. It’s likely that the lower spot prices for iron ore in recent weeks are encouraging traders and steel mills to boost imports. FULL STORY
China may see less stringent steel output controls in 2023 even as cuts widen
Source: Euronetal
China’s Hunan and Shanxi provinces recently announced steel output cut plans for 2023, and the country’s largest steelmaking hub Hebei is expected to make a similar move soon, sources told S&P Global Commodity Insights Aug. 29. However, despite widening cuts, overall government-mandated production curbs are expected to be less stringent in 2023 than in 2022, limiting any major upside for Chinese steel prices for the rest of the year, they said. Central China’s Hunan and northern China’s Shanxi plan to reduce their crude steel output in 2023 by around 1.9 million mt and 3 million-4 million mt, respectively, from 2022 levels, sources said. Hunan and Shanxi produced 13.21 million mt and 34.51 million mt of crude steel output over January-June, both down by 3% on the year, respectively, according to the National Bureau of Statistics. FULL STORY
Coal
China continues coal spree despite climate goals
Source: The Guardian
China is approving new coal power projects at the equivalent of two plants every week, a rate energy watchdogs say is unsustainable if the country hopes to achieve its energy targets. The government has pledged to peak emissions by 2030 and reach net zero by 2060, and in 2021 the president, Xi Jinping, promised to stop building coal powered plants abroad. But after regional power crunches in 2022, China started a domestic spree of approving new projects and restarting suspended ones. In 2022 the government approved a record-breaking 106 gigawatts (GW) of new coal-fired power capacity. One gigawatt is the equivalent of a large coal power plant. This run of approvals is continuing, potentially on track to break last year’s record, according to analysis by the Global Energy Monitor (GEM) and the Centre for Research on Energy and Clean Air, published on Tuesday. It said in the first half of 2023, authorities granted approvals for 52GW of new coal power, began construction on 37GW of new coal power, announced 41GW-worth of new projects, and revived 8GW of previously shelved projects. It said about half of the plants permitted in 2022 had started construction by summer. FULL STORY
China’s thermal coal imports rise amid domestic price, output woes
Source: Reuters
China’s imports of thermal coal are expected to have ticked higher in August as seaborne prices for the power-generation fuel remain competitive amid constrained domestic supplies. A total of 28.95 million metric tons of thermal coal are expected to arrive at Chinese port this month, up from July’s 28.8 million and the most since May, according to data compiled by commodity analysts Kpler. China, the world’s largest coal importer, producer and consumer, has boosted imports this year as demand for thermal power generation increased as hydropower struggled. Since March, seaborne imports of thermal coal have exceeded 28 million metric tons every month, except for the 27.63 million from June, according to Kpler. In 2022, seaborne imports of thermal coal only once breached the 24 million metric tons level, in November, and were below 20 million for eight of the 12 months. The robust demand for imported coal comes as thermal power generation increases, with a record 600 billion kilowatt-hours (kWh) produced in July, up from 556 billion kWh in the same month in 2022. FULL STORY
China’s July coal imports surge as heatwaves drive power use
Source: Reuters
China’s coal imports remained at elevated levels in July after overseas purchases nearly doubled in the first half of 2023, as utilities continued to bring in cheaper supplies to meet peak summer power demand, data showed on Tuesday. The world’s top coal consumer imported 39.26 million metric tons of coal last month, a touch below the 39.87 million metric tons in June and compared with average monthly amounts of 37 million metric tons between January and June, data from the General Administration of Customs showed. The July purchases soared 67% from 23.52 million metric tons a year earlier. China’s monthly coal import record was 43.56 million metric tons in January 2020. Power loads have surged and hit new peaks since mid-June as large swathes of the country experienced periods of abnormally high temperatures. The delivered cost of 3,800-kilocalorie coal from Indonesia and South Africa, as well as higher quality 5,500-kilocalorie fuel from Australia, was lower than the price of domestic supplies in China. FULL STORY
China cut coking coal imports by 8% m/m in July
Source: GMK
In July 2023, China reduced coking coal imports by 8% compared to the previous month, to 7.13 million tons. This is evidenced by the data of the Chinese customs authorities, S&P Global reports. The main factor in the decline in the July figure is a decrease in the supply of raw materials from Russia and Canada. Russian imports fell 27% mom in July to 1.61 mln t amid repairs to the railroads that transport coal to ports for export. The volume of imports from Australia also fell sharply by 26% compared to the previous month – to 161.7 thousand tons. Deliveries from the USA and Canada decreased by 17% and 52%, respectively, to 359.5 thousand tons and 445.2 thousand tons. At the same time, imports of coking coal from Mongolia resumed during July. Over the month, Chinese consumers imported 4.34 million tons of Mongolian raw materials, up 14% m/m. FULL STORY
Global coal demand set to remain at record levels in 2023
Source: IEA
Global coal consumption climbed to a new all-time high in 2022 and will stay near that record level this year as strong growth in Asia for both power generation and industrial applications outpaces declines in the United States and Europe, according to the IEA’s latest market update. Coal consumption in 2022 rose by 3.3% to 8.3 billion tonnes, setting a new record, according to the IEA’s mid-year Coal Market Update, which was published today. In 2023 and 2024, small declines in coal-fired power generation are likely to be offset by rises in industrial use of coal, the report predicts, although there are wide variations between geographic regions. China, India and Southeast Asian countries together are expected to account for 3 out of every 4 tonnes of coal consumed worldwide in 2023. In the European Union, growth in coal demand was minimal in 2022 as a temporary spike in coal-fired power generation was almost offset by lower use in industry. European coal use is expected to fall sharply this year as renewables expand, and as nuclear and hydropower partially recover from their recent slumps. In the United States, the move away from coal is also being accentuated by lower natural gas prices. FULL STORY
Soybean
China’s changing soybean trends pose questions for South America
Source: Dialogo Chino
China is the world’s leading importer of soybeans, but changing dynamics and longer-term trends may pose questions for South American producer nations, which have seen years of reliable growth in the soy sector to meet rising Chinese demand. After two decades of near-constant increases, China’s soybean imports have seen periodic dips and disruption since 2019, linked to the effects of the Covid-19 pandemic and African swine fever outbreaks in the Chinese pork industry, a major destination for soy as feed. FULL STORY
China soybean imports shift from US to Brazil
Source: WORLD-GRAIN
A bumper soybean crop and lower prices in Brazil led China to increase oilseed purchases from that country in July while sharply reducing its intake from the United States, Reuters reported, citing data from the China’s General Administration of Customs. The data showed imports from the United States declining 62% in July from the previous year while supplies from Brazil rose 32% in same period, according to Reuters. FULL STORY
China July soybean imports up 23.5% on year
Source: REUTERS
China imported 9.73 million metric tons of soybeans in July, up 23.5% from a year ago, customs data showed on Tuesday, as near-record production in Brazil boosted supplies. Arrivals for the first seven months of the year came to 62.3 million metric tons, up 15% from a year earlier, the data showed. FULL STORY
U.S. soybean exports to China could be lowest since 2018-2020
Source: REUTERS
The U.S. has been selling China quite a few soybeans in recent weeks as the PRC is reacting to rising Brazilian FOB premiums as their harvest winds down, congestion at some of the Brazilian ports and uncertainty as to how large the U.S. crop this fall will be. Nonetheless, the USDA did pare the new crop 2023/24 export projection by 25 mln bushels in this month’s WASDE report to 1.825 billion and further cuts may be forthcoming not only for next year but even this year where the 2022/23 export projection was left unchanged at 1.980 billion bushels. FULL STORY
US politicians’ arrogance will harm soybean farmers eyeing Chinese market
Source: Global Times
It should come as no surprise that Reuters reported on Sunday that China’s soybean imports from the US fell 62.3 percent in July from a year earlier. Whether China buys US soybeans or not is determined by economic factors. If US soybeans are not economically competitive, relying solely on exerting economic coercion cannot support US soybean exports. FULL STORY
Rising animal feed demand boosts China’s soybean imports
Source: nutriNews
Soybean imports by China in July surged due to demand for animal feed and larger shipments from Brazil. According to official data, China witnessed a nearly 25% rise in soybean imports in July compared to the previous year. This growth was primarily fueled by heightened demand from the world’s leading buyer, particularly for animal feed purposes. Notably, a significant portion of these imports originated from Brazil. FULL STORY
Chinese soy buyers see imports peaking at 100 million metric tons for coming years
Source: Successful Farming
Chinese soybean buyers attending a large U.S. soy export conference believe imports for 2023 will be a bit larger than some projections, but they don’t see import volumes growing much more in the coming years. Chinese soybean buyers attending a large U.S. soy export conference believe imports for 2023 will be a bit larger than some projections, but they don’t see import volumes growing much more in the coming years. FULL STORY
China’s soybean imports may reach record 100 mln tons in 2022/23 MY
Source: UkrAgroConsult
China may import a record 100 mln tonnes of soybeans in the period from October 2022 to September 2023, according to the forecast of the US Department of Agriculture (USDA) analysts. According to their estimates, in the last quarter of the current agricultural year (July-September), the supply of oilseeds to China will remain high, as China purchases the crop in South America at competitive prices, and gradually accepts the cargoes with imported raw materials that arrived weeks and/or months earlier. FULL STORY
China soybean crush margin turns positive after 2 months, headwind remains
Source: S&P Global
- Recovering crush economics
- Rising DCE futures contract for soybean meal and oil
- Decreasing crush volumes in China China soybean gross crush margins for October have rebounded from negative to positive territory, with Platts, part of S&P Global Commodity Insights, assessing it at $0.37/mt Aug. 25, up from minus $7.85/mt Aug. 24. FULL STORY
Brazil dominates increasing share of China’s soybean market
Source: Merco Press
The world’s soybean market is dominated by one major buyer: China, and for years, Mercosur’s leading member Brazil has taken an increasingly bigger share of that trade away from the US. So much so that Brazilian shippers are even starting to dominate during the typical season lull. Chinese buyers are snapping up Brazilian soybeans for delivery in October, a time of year when US exports are typically at their peak and more deals for the fourth quarter are still likely to be done, according to market sources quoted by Economic Indian Times News. FULL STORY
Energy
China LNG buyers expand trading after adding more US, Qatari contracts
Source: REUTERS
- Raised US, Qatar term contracts by half since late 2022
- Contracted Qatari, US volumes to total 42 mln mtpy by 2026
- Companies seeking more from US, Qatar, other suppliers
- Chinese majors already trading actively; utilities to join
- Chinese companies to act as seasonal sellers into Europe, Asia China’s liquefied natural (LNG) gas importers are starting up or expanding trading desks in London and Singapore to better manage their growing and diversified supply portfolios in an increasingly volatile global market. FULL STORY
China sees boom in LNG infrastructure as import demand surges
Source: upstream
Three terminals have come online so far this year, bringing annual import capacity to 120 million tonnes. China’s appetite for natural gas continues to surge as the world’s second-largest economy strives tofulfil its environmental commitments and transition towards a low-carbon future. FULL STORY
Gazprom sends first-ever shipment of Baltic LNG to China via the Arctic
Source: HIGH NORTH NEWS
Natural gas company Gazprom has become Russia’s second energy corporation to send liquefied natural gas to China via the Arctic. In contrast to Novatek’s shipments, which use gas produced within the Arctic, Gazprom’s shipment comes from the Portovaya liquefaction plant in the Baltic Sea. This is the first time that a company has shipped gas from outside the Arctic along the Northern Sea Route. The summer of 2023 has brought another “first” to Russia’s Northern Sea Route (NSR). Following the initiation of regular oil shipments of both Arctic and Urals crude to China via the Polar region, the route has now been used for delivery of liquefied natural gas (LNG) from the Baltic region for the first time. FULL STORY
China slowdown, oil output cuts in focus at key energy industry events
Source: REUTERS
China’s tepid economic growth and a possible extension of oil output cuts from top exporter Saudi Arabia are set to dominate discussions as global energy executives and officials gather next week at two major industry events in Singapore. For the first time, the Asia Pacific Petroleum Conference (APPEC) and Gastech will take place in the same week, creating what will be the largest energy sector gathering in Asia since the pandemic. FULL STORY
Petronas to ship more LNG to China
Source: CHINA DAILY
Petronas plans to export more liquefied natural gas to China to meet the country’s soaring demand for clean energy and industrial upgrade, senior executives of the Malaysian State-owned energy group said, amid a renewed push for green and innovation-led growth by the world’s second-largest economy. China’s efforts to peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060, as well as the tangible growth brought on by the Regional Comprehensive Economic Partnership and surging demand for high-end lubricating oil by automotive firms, present several new opportunities for the nation. FULL STORY
Oil rises as China moves to support economy, tropical storm in focus
Source: REUTERS
- China halves stamp duty on stock trades to boost flagging market
- Tropical Storm Idalia expected to hit Florida as hurricane
- Fed’s Powell says higher rates may be needed Oil rose on Monday after China took steps to bolster its flagging economy, though investors remained worried about the pace of growth as well as further U.S. interest rate hikes that could dampen demand. FULL STORY
Oil dips as China factory activity slows; market eyes US data
Source: REUTERS
Oil prices eased on Thursday after data showed a drop in China’s manufacturing activity, with investors also eyeing a U.S. personal consumption expenditure report due later in the day. Brent crude futures for October, which expire on Thursday, dipped 12 cents, or 0.1%, at $85.74 per barrel by 0350 GMT. The more active November contract was down 6 cents, or 0.1%, at $85.18. FULL STORY
Beijing issues new oil product export quotas to encourage outflows
Source: S&P Global
China has issued new oil product export quotas to enable oil companies to send their surplus barrels overseas, senior officials with two quota holders said on Aug. 28. An official with another state-owned company also said Beijing has issued new oil product export quotas, but both of them declined to give details on the quota volume. FULL STORY
Oil’s path to 2023 peak faces a barrier in Beijing
Source: Bloomberg
Oil prices are approaching this year’s highs as demand hits new records and supplies tighten. But the market’s main obstacle may be what was once its biggest catalyst: China. Brent crude futures are hovering just below the six-month high near $88 a barrel reached last week. Leading forecasters from JPMorgan Chase & Co. to Standard Chartered Plc predict a further surge in the months ahead to $90 a barrel and beyond. FULL STORY
Russian crude oil now flowing to China via Arctic ocean
Source: HIGH NORTH NEWS
Russia continues to reroute oil previously destined for Europe to Asia. Now, two tankers have traveled across the Arctic to China, thereby elevating the risk profile of Arctic shipping, experts say. Increased traffic means increased probability of an accident – with very high consequences. With the onset of the summer navigation season on the Northern Sea Route (NSR), Russia has begun sending crude oil shipments to China via the Arctic. After an initial trial voyage in November 2022, energy analysts expect Russia to send regular shipments through the Arctic during 2023 and beyond. FULL STORY