Bulk Shipping Watch Newsletter – June 2023

June 2023

Iron Ore & Steel

Iron ore prices rose for the second week in a row

Source: GMK Center

September iron ore futures, the most traded on the Dalian Commodity Exchange, increased by 5.7% from the previous week – up to 812 yuan/t ($114.03/t) for the June 2-9, 2023 period. This is evidenced by Nasdaq data. On the Singapore Exchange, quotations of basic July futures as of June 9, 2023, increased by 8.2% compared to the price a week earlier – up to $112.65/t. Iron ore prices rose for a second week in a row as the market remained optimistic about the outlook for demand amid growing signs that the world’s top steel producer, China, would introduce more economic stimulus. FULL STORY

Iron ore price up on China stimulus hopes

Source: Mining

Iron ore price rose on Friday, extending a rally spurred by surprise growth in China’s factory activity in May. Market commentators continue to speculate about China rolling out additional stimulus to support its economic recovery. According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $105.63 a tonne Friday morning, up 2.8%. The most-traded September iron ore contract on China’s Dalian Commodity Exchange ended daytime trading 2.9% higher at 745.50 yuan ($107.85) a tonne, off a session high of 755.50 yuan, its strongest since April 21. FULL STORY

Iron Ore Sheds Nearly 5% After Goldman’s China Property Warning

Source: Bloomberg

Iron ore fell for the first time in nine sessions as Goldman Sachs Group Inc. warned that property weakness would likely be a multiyear growth drag for China’s economy.The steel-making staple dropped almost 5% in Singapore after the investment bank said in a note that it sees persistent problems in Chinese real estate, mainly related to lower-tier cities and private developer financing. There was no quick fix and the property recovery was likely to be “L-shaped,” according to Goldman. FULL STORY

The level of export prices on the global steel market decreased in June

Source: GMK Center

The level of price export offers on the global steel market in June 2023 decreased compared to previous months. Monthly average Chinese hot rolled coil (HRC) offers in June fell 2% from May, or $13/t, to $554/t FOB, while offers from Indian mills fell 5% m/m – to $568/t FOB. The price of Turkish reference rebar in this period fell by $6/t compared to May – to $630/t. A number of factors influenced the level of offers on the global market. First of all, there is still a lack of sufficient demand for steel in the leading economies, which forces producers to constantly reduce export prices. Demand from end consumers is affected by inflation and energy prices, which, although decreasing, still have a negative effect. FULL STORY

China steel exports seen surging to seven-year high as home demand wilts

Source: Reuters

China is set to export the most steel this year since 2016, say analysts, as the weakening yuan and competitive prices help the world’s biggest producer offload surplus metal due to weak demand at home. China’s massive steel industry has been hard hit by a months-long slump in the country’s huge property sector, pushing steel prices to three-year lows in May. But strong demand mostly from Asia and Africa is helping keep a lid on stocks and allowing mills to continue operations. FULL STORY

Steel exports from China will rise to a 7-year high in 2023

Source: GMK Center

During 2023, Chinese steel companies will increase exports to a 7-year maximum – up to 67-77 million tons. Only in January-May 2023, the country’s steelmakers increased the shipment of steel abroad by 41% – up to 36.4 million tons. Reuters reports about it. China could significantly increase its steel exports this year as domestic demand is currently suffering due to a significant downturn in the country’s construction sector. Export opportunities for Chinese steelmakers are promising thanks to a weaker yuan and competitive prices. These factors contribute to the shipment of surplus steel to foreign consumers, mainly Asian and African. FULL STORY


Drought-depleted hydropower drives China to turn to coal

Source: Reuters

China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a result of low rainfall across the south since the middle of 2022. China’s generation increased by +173 billion kilowatt-hours (+5.3%) in the first five months of the year compared with the same period in 2022, data from the National Bureau of Statistics (NBS) showed. FULL STORY

It’s Terribly Hot in China, But Coal Prices Still Have Room to Fall

Source: Bloomberg

Despite scorching heat boosting power demand as fans and air conditioners get switched on, Chinese coal hasn’t been this cheap in over two years — and it could get even cheaper. The fuel used by power plants dropped this week to 772 yuan ($108) a ton at the port of Qinhuangdao, its lowest since April 2021. The latest figures on supply show domestic production running nearly 5% ahead of last year, while imports have risen a whopping 90%. Indicators, from elevated inventories to a contraction in manufacturing activity, all point to souring demand as China’s economic recovery stalls. 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 coking coal prices rose amid recovery of China’s steel market

Source: GMK Center

Quotation of coking coal in Australia (FOB Australia), according to S&P Global, for the week of June 19-26, 2023, increased by 3%, or by $7/t, compared to the previous week – up to $236/t. A slight increase in Australian coking coal prices was driven by rising steel prices. The focus is currently on the Chinese market, where domestic demand is improving. Some coking plants are restocking, and domestically produced coking coal may rise in price in the near future. FULL STORY

China’s coal seaborne imports surge 73%

Source: MarineLink

The Chinese government target for domestic coal production is 4.6 billion tonnes in 2025, which is 2.5% higher than in 2022. As production year-to-date has already increased by 5.8% compared to 2022, Chinese coal mines will likely hit that target this year. Domestic coal supply has faced stiff competition from seaborne coal imports due to price and quality. In addition, coal imports from Mongolia have increased five-fold compared to last year,” says Rasmussen FULL STORY


More Russian soybeans arrive in China, set to inject new vigor to trade

Source: Global Times

A shipment of 271.6 tons of Russian soybean arrived at Manzhouli Port in North China’s Inner Mongolia Autonomous Region on Friday, the first of its kind since the launch of the New Land Grain Corridor, which connects China with the Eurasian Union countries including Russia.The soybean imports from Russia are not only the latest indication of the strengthened win-win cooperation between China and Russia in farming trade but is also driven by the market need for diversifying sources of supplies for food security reasons, while reducing reliance on singular suppliers, particularly the US, experts said. FULL STORY

US, Brazil to compete on soybean sales to China

Source: Gro Intelligence

Brazil historically has exported about 60% of its soybean production. If that percentage holds up again this year, there could be little room for China to substantially increase its purchases of US soybeans, as stipulated under the “phase one” trade deal the two countries signed. Currently, Brazil is on track to yield 3.22 tonnes of soybeans per hectare, according to Gro’s recently launched Brazilian soybean yield model. That implies Brazilian soybean production of a near-record 118.8 million tonnes, up 3.2% from last year. FULL STORY

Surge of soybean cargoes into China cools buying appetite

Source: Reuters

A flood of Brazilian soybean cargoes into China is weighing on soymeal purchases and may curb buying of beans later in the year, traders and analysts said. Soybean arrivals into the world’s top buyer have been running at record levels since the start of the year, after a record crop in Brazil pushed down prices of the animal feed protein. FULL STORY

China’s shift from corn to wheat could hamper imports

Source: VettaFi

The second-largest economy is making use of its wheat surplus. China is shifting from corn to wheat for its animal feed market, which could hamper corn imports. Soymeal could also see reduced consumption in this shift, as reported by Reuters. Consequently, it’s not good news for nations like Brazil and the United States — two of the largest producers of corn and soybeans. FULL STORY

Increased supplies putting pressure on soybean prices

Source: FarmProgress

It wasn’t that long ago that U.S. soybean futures were trading at $15 to $16 a bushel, driven up by drought conditions in the growing areas of the U.S. and South America and concerns about shipments of soybeans, other oilseeds and grains from Ukraine. Those prices may be only a fond memory in the coming months, given the improved outlook for soybean production not only in the U.S., but also in Brazil and Argentina, and the prospects for continued oilseed shipments under the Black Sea Grain Initiative. FULL STORY

China’s Q3 soybean demand to slow on falling meal prices, thin crush margins

Source: S & P Global

  • Higher volume of soybeans to arrive May-July
  • Soybean meal prices collapsing; impending negative basis
  • Q3 soybeans open demand estimate down 3 mil mt Chinese crushers are expected to slow their third-quarter 2023 demand coverage as soybean meal prices are on a downward trajectory, resulting in deteriorating crush margins and a lower estimate for total open demand, industry sources said. FULL STORY

China’s May soybean imports from Brazil jump 40% y/y

Source: Nasdaq

China’s soybean imports from Brazil soared 40% in May, compared with a year-ago period, data showed on Tuesday, after big purchases of cheap beans arrived into Chinese ports. The world’s top buyer of soybeans imported 10.94 million metric tons of the oilseed from Brazil, its largest supplier, versus 7.79 million tons a year earlier, data from the General Administration of Customs showed. FULL STORY

China posts robust commodities imports despite stuttering growth

Source: American Journal of Transplantation

China posted robust commodities imports in May, defying stutters in the wider economy, as buyers took advantage of weaker international prices and energy importers stocked up ahead of peak demand in the summer. Traders may also be anticipating that Beijing will soon ramp up stimulus to revive growth. Unless demand lifts significantly, much of the extra supply, especially of industrial materials, could end up being stockpiled. That would further weigh on prices as the usual lull in factory and construction activity takes hold over the summer. FULL STORY

Analysis: For Xi, China’s diet is too dependent on U.S., Ukraine

Source: Nikkei Asia

Katsuji Nakazawa is a Tokyo-based senior staff and editorial writer at Nikkei. He spent seven years in China as a correspondent and later as China bureau chief. He was the 2014 recipient of the Vaughn-Ueda International Journalist prize. “Returning forest to farmland” is a slogan trending on China’s internet these days. Video clips of parks and forests being turned into farmland are going viral. FULL STORY


China gas demand becomes more feasible at low LNG prices but challenges persist

Source: S & P Global

  • Buying interest picks up for forward deliveries in recent tenders
  • Price advantage of pipeline gas over spot LNG starting to erode
  • Spot LNG still not a guaranteed money making business in China: analyst China’s natural gas demand is becoming more feasible with Asian LNG spot prices dropping below the key $9/MMBtu level this week, but a steeper drop may be needed for any substantial demand to emerge amid challenging economic conditions. FULL STORY

Cheniere signs LNG supply deal with China’s ENN

Source: Reuters

Cheniere Energy (LNG.A) said on Monday it will supply 1.8 million tonnes of liquefied natural gas (LNG) per annum to China’s ENN Natural Gas (600803.SS) for over 20 years. The United States has emerged as the world’s largest LNG exporter after Western sanctions on major supplier Russia left Europe scrambling to find alternate sources for the commodity. FULL STORY

Qatar strikes second big LNG supply deal with China

Source: Reuters

  • Qatar signs second 27-year deal to supply China with LNG
  • Asian customers lead race to secure LNG from QatarEnergy’s expansion
  • China’s CNPC takes equity stake in QatarEnergy expansion project Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead in the race to secure gas supplies from Doha’s massive production expansion project. FULL STORY

China natural gas traders pause spot purchases as prices surge

Source: Bloomberg

  • LNG prices jump by the most in six months to $11.58/mmbtu
  • China buyers stop inquiries, India companies cancel tenders The biggest spike in Asian natural gas prices in more than six months has made buyers in China pause spot purchases. FULL STORY

Russia ratifies agreement on natural gas supply with China

Source: Asia News Network

As soon as the project reaches its full capacity, the amount of Russian pipeline gas supplies to China will grow by 10 billion cubic meters, totalling 48 billion cubic meters per year. Russia has ratified an intergovernmental agreement with China on cooperation in natural gas supplies from Russia to China via the Far East route, after the Federation Council, the upper house of the Russian parliament, approved the law on ratification at a plenary session on Wednesday, according to Russia’s TASS state news agency. FULL STORY

Oil futures up 3% on strong China refinery data, weaker US dollar

Source: Reuters

Oil prices gained about 3% to a one-week high on Thursday on a weaker U.S. dollar and a jump in refinery runs in top crude importer China. The oil market drew support from U.S. reports showing retail sales unexpectedly rose in May and higher-than-expected jobless claims last week cut the dollar , to a five-week low versus a basket of other currencies. FULL STORY

China drills in deeper waters to cut reliance on foreign oil

Source: Reuters

  • State-owned giant Cnooc spearheading offshore drilling efforts
  • Wells at sea account for 60% of country’s new oil production A concrete expanse the size of Monaco jutting off China’s southern coastline is the imposing centerpiece in Beijing’s efforts to slow its growing dependence on imported oil. FULL STORY

Saudi Aramco looks to China and India to prop up oil markets

Source: CNBC

  • Aramco’s CEO Amin Nasser believes that the oil market fundamentals remain generally “sound” for the rest of the year.
  • “Although China is facing some economic headwinds, the transport and petrochemical sectors are still showing signs of demand growth,” the CEO added. Saudi Arabia’s state-owned oil giant Aramco is bullish on oil markets for the rest of 2023 as demand from major importers China and India is expected to be strong despite an expected global downturn. FULL STORY

Will China’s oil demand disappoint this year?


  • Despite underwhelming economic data from China that have depressed oil market sentiment in recent weeks, no one has made any material downward revisions to their forecasts for China’s oil demand growth.
  • In light of the underwhelming Chinese recovery, the authorities could opt for additional fiscal stimulus and policy easing to put economic growth back on the targeted track.
  • ING: China is expected to account for over 1 million bpd of the estimated 1.9 million-bpd global oil demand growth this year. China’s economic recovery is sputtering, prompting renewed concerns about crude oil and other commodities demand that could result in slower-than-expected global oil demand growth this year and weigh on oil prices. FULL STORY

China seeks stronger economic ties with Saudi Arabia beyond crude oil as Middle East seeks ‘ideal partner’

Source: South China Morning Post

  • China has stepped up its diplomatic and economic efforts in the Middle East beyond traditional oil and gas cooperation, particularly with Saudi Arabia
  • There is an opportunity for China to focus on the Middle East, with the United States seen to have been pivoting towards Indo-Pacific region, analysts said China’s swift progress to improve diplomatic and economic ties with Saudi Arabia has added green energy, finance, infrastructures and information technology to traditional oil and gas cooperation as the Middle East seeks an “ideal partner” to aid its development, according to academics and analysts. FULL STORY