Bulk Shipping Watch Newsletter – July 2023

July 2023

Iron Ore & Steel

Iron ore price falls as China’s Yunnan province orders steel output curbs

Source: Mining

Steel mills in China’s southwestern Yunnan province have been asked to prepare to cut back production to meet a government mandate on capping 2023 output at last year’s level, two Chinese consultancies said on Friday. The orders, reported by Shanghai-based consultancies MySteel and Fubao, follow similar instructions issued to mills elsewhere earlier this week, weighing on iron ore prices.According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $110.07 a tonne Friday morning, down 3.58%. The most-traded September iron ore futures contracts on the Dalian Commodity Exchange closed daytime trading 2.68% lower on Friday at 834.5 yuan ($116.56) per metric ton, the lowest since July 13. FULL STORY

China increased iron ore production by 5.7% y/y in the first half of 2023

Source: GMK Center

In January-June 2023, iron ore production in China increased by 5.7% compared to the same period in 2022 – up to 476.76 million tons. SteelOrbis reports about it with the reference to data from the National Bureau of Statistics of China (NBS). In June, Chinese mining companies increased iron ore production by 1.8% compared to June 2022, and by 9.7% compared to May 2023 – up to 85.15 million tons. Iron ore prices were volatile during June. At the beginning of the month, the quotations increased, and the rest of the period fluctuated in a limited range. The increase in the profitability of steel plants and the growth of raw material futures contributed to the increase in prices compared to May. FULL STORY

Iron ore prices rose 3.2% amid improved activity in China

Source: GMK Center

September iron ore futures, the most traded on the Dalian Commodity Exchange, rose 3.2% from the previous week – up to 829 yuan/t ($115.68/t) for the July 7-14, 2023, period. This is evidenced by Nasdaq data. On the Singapore Exchange, quotations of the basic August futures as of July 14, 2023, increased by 1.7% compared to the price a week earlier – up to $109.92/t. Iron ore prices in China rose last week amid strong June data on raw material imports and credit growth. At the same time, the positive trend is opposed by unfavorable economic prospects and geopolitical tensions. FULL STORY

Some Chinese steel mills ordered to cap output this year

Source: Reuters

Several Chinese steel mills have received instructions to cap this year’s output at the same level as 2022, five people familiar with the matter and analyst reports said on Tuesday, potentially curbing iron ore demand in the world’s top steel market. Three mills owned by the world’s biggest steelmaker, state-owned China Baowu Steel Group, were given verbal instructions that output should not exceed that of 2022, said four of the sources, with two adding the orders were delivered yesterday. None of the people specified which authority issued the orders and all declined to be identified because of the sensitivity of the matter. FULL STORY

China’s June crude steel production rises on better margins

Source: Reuters

China’s June crude steel output rose 1.1% from May and 0.4% from a year earlier, the statistics bureau said on Monday, as mills were encouraged to ramp up production after steel prices rose.The world’s largest steel producer manufactured 91.11 million metric tons of the ferrous metal last month, data from the National Bureau of Statistics (NBS) showed, higher than 90.12 million metric tons manufactured in May and 90.73 million metric tons in the same month in 2022. The average daily steel output in June stood around 3.04 million metric tons, up from 2.91 million metric tons in May and higher than 3.02 million metric tons in June 2022, respectively, according to Reuters calculations based on NBS data. FULL STORY

Domestic demand for steel in China will increase in September-October

Source: GMK Center

In the second half of 2023, China is likely to introduce a policy of moderate control in the steel industry, ensuring that steel production does not increase, but also does not decrease. At the same time, domestic demand for steel is expected to increase in the autumn, informs SteelMint. In January-May 2023, Chinese steelmakers produced 445 million tons of steel, so the volumes in June-December should be at the level of 567 million tons or less. If the government controls steel production in the second half of the year, its average daily output will drop from the current 2.9 million tons to approximately 2.6 million tons. This year’s level of steel output should not exceed 1.011 million tons recorded in 2022.FULL STORY


Domestic demand for steel in China will increase in September-October

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. FULL STORY

Beset by drought, China turned to coal to keep lights on

Source: Reuters

China’s reliance on coal-fired power generation increased during the first half of 2023 as continued drought severely reduced hydroelectric power in the southern provinces. Total generation from all sources increased by 205 billion kilowatt-hours (kWh) in the first six months of 2023 compared with the same period in 2022. The increase was 5.2%, which implies the government is probably on track to meet its declared target of around 5% for growth in gross domestic product this year. But hydro generation slumped by 132 billion kWh (-23%) to its lowest level for eight years as the protracted drought hit reservoir levels. FULL STORY

China’s coal imports headed for recorded year in 2023

Source: S&P Global

China is expected to see a year of record coal imports in 2023, as Beijing has taken steps to encourage adequate supplies amid developing El Niño conditions that could bring heat waves and drought. China, the world’s largest coal consumer, imported 182 million metric tons (MMt) of coal in the first five months of 2023, up 89.6% year over year, data from China’s General Administration of Customs showed. That is its highest level of imports for the January-May period, according to S&P Global Market Intelligence Global Trade Analytics Suite data going back to 2003. Coal demand from the industrial sector has been under pressure due to lower exports and the struggling property sector, and El Nino conditions could raise energy demand for air conditioning and hamper hydropower output. The China Meteorological Administration confirmed the arrival of El Nino in the central and eastern Pacific region as of June 13, noting that the weather pattern came one to two months earlier than expected and developed rapidly. FULL STORY

China increased coking coal imports by 77.6% y/y in January-May

Source: GMK Center

In January-May 2023, China increased the import of coking coal by 77.6% compared to the same period in 2022 – up to 37.39 million tons. The average purchase price of the raw material was $196/t, which is 30.5% less than the price January-May 2022. Kallanish reports about it with the reference to the data of the Main Customs Administration. The main suppliers of raw materials for five months were Mongolia, Russia, Canada and America. Australia ranked sixth with a market share of just 2.2%. In May 2023, deliveries of imported coking coal to China amounted to 6.72 million tons, which is 19.8% less compared to April 2023, but 47.5% more compared to May last year. In April, the import index increased by 97% y/y. FULL STORY

World sees China as potential coal destination amid oversupply, fragile demand

Source: S&P Global

While China and India have largely been relying on domestic production to meet their requirements, overstocking in Europe and lower-than-expected winter demand drove the continent to nearly stop coal imports in Q1 2023. While China and India have largely been relying on domestic production to meet their requirements, overstocking in Europe and lower-than-expected winter demand drove the continent to nearly stop coal imports in Q1 2023. China is in the midst of economy recovery and thermal power becomes inevitable as it can help to recover in a faster pace. Coal still remains the primary source of energy in China which is attracting the whole world,” a Singapore-based trader, who deals with the China market, said. FULL STORY


Brazil is pushing the US out of world’s biggest soybean market

Source: Bloomberg

  • China is buying Brazilian soy for fourth-quarter delivery
  • That’s usually when the top buyer would turn to the US The world’s soybean market is dominated by one major buyer: China. For years, Brazil has taken an increasingly bigger share of that trade away from the US. FULL STORY

China to buy more Brazilian soybeans for Q4 as U.S. crop suffers – traders


  • Brazilian soybeans $576/T for Oct/Nov, below U.S. prices
  • Large Chinese buyers actively taking Brazilian Q4 cargoes
  • Ample Brazilian supplies to ease tight world supply
  • Dry weather in U.S. Midwest seen reducing U.S. yields China, the world’s biggest soybean importer, is likely to buy a larger volume of the oilseed from Brazil than usual for September to December, three trade sources said, as prices of new-crop U.S. shipments rise on expectations of lower supply. FULL STORY

US should improve relations to retain access to Chinese soybean market

Source: UkrAgroConsult

A Bloomberg report saying Brazil is pushing the US out of the world’s biggest soybean market – China – is gaining much attention. Although the report is somewhat exaggerated and alarmist, analysts in the US, which seeks to contain the rise of China, are concerned that US farmers may become victims of Washington’s long-term containment policy toward the world’s second-largest economy. FULL STORY

What does China’s food security push mean for soybean prices?

Source: Seeking Alpha

  • China’s soybean production reached a record high in 2022 as domestic production rose to more than 20 million metric tons.
  • Despite the push for higher production, soybeans output is unlikely to reach a level that is high enough to meet the country’s demand.
  • Although China is the world’s largest importer of soybeans, its consumption is only one of a number of factors that drive soybean prices. China has made no secret of its aim to achieve food security. As the world’s biggest importer of a number of staples, including soybeans, corn and rice, its push to be self-sufficient has significant implications for agricultural commodity prices. FULL STORY

Finding new markets outside of brazil, china for corn and soybeans


An ag economist says the US needs to create and expand market access for corn and soybean products to remain competitive with Brazil. Jim McCormick with AgMarket.Net says there is more demand for Brazil’s exports especially from China, one of the U.S.’s top customers. “The reality is that we still have tariffs on Chinese goods.  They have tariffs on our good.  We need to get away from the trade war stuff and find ways to become more competitive. FULL STORY

US should improve relations to retain access to Chinese soybean market

Source: Global Times

A Bloomberg report saying Brazil is pushing the US out of the world’s biggest soybean market – China – is gaining much attention. Although the report is somewhat exaggerated and alarmist, analysts in the US, which seeks to contain the rise of China, are concerned that US farmers may become victims of Washington’s long-term containment policy toward the world’s second-largest economy. FULL STORY

China June soy imports up 25% on year after big purchases from Brazil

Source: Reuters

China imported 10.27 million metric tons of soybeans in June, up 24.5% from a year earlier, customs data showed on Thursday, as large purchases of cheap Brazilian beans reached the market. The imports by the world’s top soybean buyer were significantly lower than the record 12.02 million tons in May, when delayed cargoes from the prior month pushed up the number. The imports were still relatively high, though, and in line with expectations. FULL STORY

Does China still need U.S. soybeans after Brazil’s export bonanza?

Source: Reuters

U.S. soybean sales to China have finally started to resemble the pre-trade war era, but amid massive Brazilian shipments and the record build in Chinese soybean stocks, one cannot help wondering whether China will end up needing as many soybeans as the United States hopes to export later in the year. As of June 11, China had 3.05 million tonnes of U.S. soybeans booked for delivery in 2020-21, which starts on Sept. 1. That is China’s largest new-crop total for the date since 2014. FULL STORY

China’s soybean imports on rise


Rebounding soybean meal and oil demand in China are driving an anticipated increase in imports for the crop, according to a Global Agricultural Information Network report from the Foreign Agricultural Service (FAS) of the US Department of Agriculture. FAS Post Beijing is estimating soybean imports to reach 98 million tonnes in marketing year 2022-23 and 98.5 million tonnes in 2023-24. The end of COVID-related restrictions, lower prices following a record soybean harvest in Brazil and modest growth in the swine and poultry sectors are expected to increase soybean meal consumption. Both projections are up significantly from the 91.566 million tonnes imported in 2021-22. FULL STORY


China is buying gas like there’s still an energy crisis

Source: S&P Global

  • Firms have signed more long-term deals than any other nation
  • Buying spree comes after China grappled with fuel shortages China is on a natural gas shopping spree, and officials are happy for importers to keep striking deals even after a global energy crisis has eased. FULL STORY

China’s natural gas consumption to grow 5.5%-7% in 2023, reverse 2022 decline: NEA

Source: Oil Monster

  • Spot LNG imports part of strategy to manage supply stability
  • To maintain 50% of gas demand from domestic sources
  • Inflexible pricing of long-term contracts presents challenges China’s annual natural gas consumption is estimated to reach 385 Bcm to 390 Bcm in 2023, a 5.5%-7% year-on-year increase, reversing a 1.2% decline in 2022, according to the China Natural Gas Development Report 2023 published by the National Energy Administration. FULL STORY

Chinese cities raise residential gas prices after policy reform


Chinese cities have been raising residential natural gas prices in recent weeks after Beijing launched a new mechanism linking retail residential gas prices with distributors’ fuel purchasing costs, a reform long sought by utilities. More than 20 cities including Shijiazhuang and Handan in the north, Nanjing in the east, and Mianyang in the southwest have raised retail gas tariffs by 0.25 yuan ($0.0347) to 0.40 yuan per cubic meter, according to two industry officials and local government websites. FULL STORY

China signals deeper reforms in oil, gas and power – state media

Source: Natural gas world

The Chinese Communist Party’s commission for deepening reforms on Tuesday approved a wide range of proposals for markets including the country’s power networks and oil and natural gas markets, state broadcaster CCTV reported. China will further reform and accelerate the construction of a power system that is “economically efficient, flexible and intelligent in supply and demand coordination”, the commission said. FULL STORY

China’s Bid For Energy Security Fuels Long-Term LNG Buying Spree

Source: Oil Price

  • China is at the forefront of long-term LNG contracting, prompted by energy security concerns and last year’s energy crisis, signing deals equivalent to one-third of all such contracts globally this year.
  • Major Chinese companies, including Sinopec and CNPC, are engaging in landmark agreements with Qatari and American LNG developers, securing supplies for up to 27 years.
  • China is set to rebound in demand and is prioritizing long-term LNG supply deals to manage future volatility and safeguard its growth targets. Efforts to protect LNG imports from the volatility in spot prices amid the many uncertainties in the natural gas market and geopolitics, and the increased attention to energy security has prompted all gas importers – including a previously reluctant Europe – to sign more long-term LNG deals in recent months. FULL STORY

Mexico pacific signs 20-year LNG supply deal with China’s Zhejiang energy


Mexico Pacific Ltd has struck a 20-year deal to sell 1 million tons of liquefied natural gas (LNG) a year from its Saguaro Energia export plant in Sonora state to China’s Zhejiang Energy, it said on Wednesday. Mexico Pacific CEO Ivan Van der Walt said in the company’s news release that LNG was “an important pillar” to China’s energy security needs. “Zhejiang Energy is the sole gas distributor in Zhejiang province, one of the largest provincial economies in China,” he said. “Under this new agreement, Mexico Pacific will further support the growing energy requirements of this region.” FULL STORY

Oil dips over 1.5% on demand fears after weak Chinese data


  • Chinese economic growth falls short of expectations
  • Two of three Libyan fields have resumed output
  • Russian oil exports from western ports set to fall -sources Oil dropped by more than 1.5% on Monday after weaker than expected Chinese economic growth raised doubts over the strength of demand in the world’s second biggest oil consumer, and a partial restart of halted Libyan output also pressured prices. FULL STORY

China’s fuel oil imports to continue uptrend in 2023 amid strong demand, tight crude quotas

Source: S&P Global

  • H2 imports likely around 1.4 mil mt/month
  • Independent refineries try get around quota rules
  • Rising fuel oil price hurts margins Chinese independent refineries are likely to keep importing large volumes of fuel oil as feedstock for the rest of the year to compensate for tight crude quota availability, refinery and trade sources told S&P Global Commodity Insights July 25. FULL STORY