05 November, 2021

Bulk Shipping Watch Newsletter

IRON ORE & STEEL


SEABORNE IRON ORE MARKET TO LOSE 40MLN TONNES IN SUPPLY NEXT YEAR
​​Source: Metal Bulletin-Oct 29th 
The iron ore seaborne market supply might lose 40 million tonnes in 2022 compared with 2021, the ferrous director at Brazilian mining company Vale, Marcello Spinelli, said.
This reduction follows from a trend that began this year of important iron ore suppliers – including Brazil, India and the Commonwealth of Independent States – focusing more on their domestic markets. Lower supply from Australia is also expected, according to the executive. Such a scenario could partially offset expected lower Chinese demand for iron ore due to steel output cuts, he added. FULL STORY

CHINESE COAL AND IRON ORE IMPORTS DOWN FROM LAST YEAR
Source: Hellenic Shipping News-Oct 28th 
Despite the very strong freight rates and the apparently tight market, the all-important driver for dry bulk shipping, China, has in fact seen imports of its two largest dry bulk commodities shrink year-on-year so far this year. The two largest imported commodities for China, iron ore and coal are however, interestingly on two different trajectories, as the latter could be ending the year with higher total volumes than in 2020.
“The high freight rates that the dry bulk market is currently enjoying cannot directly be linked to higher volumes from the world’s largest dry bulk importer. Although though Chinese imports have been solid this year, they have in no way provided the rate of growth needed to justify the current freight rates,” says Peter Sand, BIMCO’s Chief Shipping Analyst. FULL STORY

CHINA SETS ACTION PLAN TO CUT EMISSIONS, ENHANCE EFFICIENCY IN OIL, CHEMICALS INDUSTRIES BY 2025
Source: S&P Global-Oct 22nd 
China's National Development and Reform Commission has introduced a new series of action plans for key industries in an effort to enhance energy efficiency and accelerate the country's peak carbon emissions and net-zero timeline targets.
Those industries include oil refining and petrochemicals, as well as steel, aluminum, cement, flat glass, synthetic ammonia, calcium carbide, data centers and more, according to the NDRC's action plan guideline on its website Oct. 21. The oil refining and petrochemicals industries must ensure that more than 30% of plant capacity meets the industrial standard for energy efficiency by 2025, according to the plan. FULL STORY

STORM CLOUDS GATHER OVER IRON ORE OUTLOOK WITH CHINA WOES, RISING SUPPLY
Source: StarTribune-Oct 23rd
The bearish risks for iron ore are mounting, with Chinese steel output and construction slumping, port inventories building and a wave of new supply en route to China.
The spot price of benchmark 62% iron ore for delivery to north China, as assessed by commodity price reporting agency Argus, has so far taken the latest negative news in its stride. Last week's trading range was narrow. But since iron ore's record high of $235.55 a tonne in May, the steel-making ingredient has traded in a range of between $100 and $137 for the past two months. FULL STORY 

BHP REPORTS DROP IN IRON ORE SHIPMENTS FROM AUSTRALIA
Source: SMH–Oct 19th 
Mining giant BHP’s iron ore shipments from Australia slipped 5 per cent in the September quarter as major maintenance works, a labour shortage and ongoing COVID-19 border restrictions slowed production of the nation’s most valuable export.
BHP told investors on Tuesday it had shipped 70.6 million tonnes of the steel-making raw material in the three months to September 30, a decline of 5 per cent compared to the same time last year and 3 per cent less than the previous quarter. FULL STORY 

‘IRON ORE PRICES DECLINE AND RAPID RISE IN SHIPPING RATES’ – ANOTHER IRON ORE MINER HALTS OPERATIONS
Source: Hellenic Shipping News-Oct 4th 
After Venture Minerals announced on September 17 that it is temporarily halting iron ore shipments from its Riley iron ore mine in Tasmania due to the metal’s recent precipitous fall, another miner followed suit.
Mount Gibson Iron Limited said that given recent significant adverse movements in iron ore prices, product discounting and shipping freight rates, the company will implement a staged suspension of operations at the Shine mine site, located in the Mid-West and at Koolan Island in the Kimberley region of Western Australia.
The operation will continue ore mining and processing over the next month to facilitate a shipment around the end of October, following which the site will be placed on “care and maintenance” pending an improvement in iron ore market conditions, the company said in its statement. FULL STORY 

COAL


CHINA’S PHYSICAL COAL PRICES TELL DIFFERENT STORY TO FUTURES
Source: Reuters-Oct 27th 
China’s coal futures have slumped about 35% from their recent record high, a move that looks dramatic but is actually a long way from what is needed to provide relief from the country’s energy crisis.
It continued its decline in early Asian trade on Tuesday, falling as low as 1,207 yuan a tonne before steadying around 1,247 yuan. But context is everything and there are two main factors worth bearing in mind when interpreting the decline in the futures contract.
The first is that the front-month contract is still up 192% from its 2021 low point of 446.6 yuan a tonne on Feb. 23, meaning prices are still at extremely elevated levels. The second is that the ZCE contract is mainly an investment tool for the Chinese domestic market, and actually doesn’t necessarily reflect the realities on the ground in the country’s coal market. FULL STORY 

CHINA TRADERS HUNT FOR COAL PRICE DIRECTIONS AS BEIJING REINS IN DATA PROVIDERS
Source: Reuters-Oct 27th
Chinese coal traders say they are scrambling for price information on spot transactions, relying on personal communications as Beijing steps up scrutiny amid efforts to tame prices.
The country's top economic planner, the National Development & Reform Commission said this week it would investigate coal and energy index providers over spreading "fabricated" price information. The agency is also studying a new mechanism to guide coal prices within a reasonable range over the long term. FULL STORY 

CHINA SETS TARGET COAL PRICE IN BID TO EASE POWER CRUNCH
Source: Reuters-Oct 28th
China's state planner has set an immediate price target for thermal coal in its most direct intervention yet to cool the market for the key power-generating fuel amid a severe power crunch, trading and power firm sources told Reuters.
The price target was revealed at meetings on Tuesday and Wednesday between the National Development & Reform Commission (NDRC) and coal miners and distributors, as well as power firms. Chinese coal futures slumped again on Thursday and have nearly halved from a record high on Oct. 19. FULL STORY 

CHINA AGREES ON PLAN TO CAP COAL PRICE TO EASE POWER CRISIS
Source: Business News-Oct 28th
CHINA plans to limit the price miners sell thermal coal for as it seeks to ease a power crunch that's prompted electricity rationing and even caused a blackout in a major city in September.
Beijing aims to set the price of its most-popular 5,500-NAR grade coal at 440 yuan (S$92.90) a tonne at the pithead. That price, which includes taxes, is a target rate, and there will be an absolute ceiling at 528 yuan. The plan, which is scheduled to last until May 1 next year, is pending approval by the State Council, and could be revised. FULL STORY 

CHINA'S Q4 MET COAL DEMAND TO OUTSTRIP SUPPLY BY 1 MIL MT/MONTH: SOURCES
Source: S&P Global-Oct 25th 
China's move to restrain excess metallurgical coal production since March has squeezed supply in the markets, with demand seen considerably outstripping supply in the fourth quarter of 2021.
China's Q4 met coal demand is expected to be at 46 million mt/month, with 1 million mt/month deficit, Baosteel's research arm Hwabao Securities said. The research firm sees China's Q4 met coal imports at 4 million mt/month, with domestic met coal output at 41 million mt/month. FULL STORY 

CHINA UNVEILS PLAN TO SLASH FOSSIL FUELS BUT FAILS TO ANNOUNCE NEW EMISSIONS TARGET
Source: CNN-Oct 25th  
China plans to cut its reliance on fossil fuels to below 20% by 2060, according to a cabinet document published in state media Sunday.
While the document detailed new measures on how the world's biggest polluter will decarbonize, the country is not updating its pledge to reduce emissions. The guidelines come less than a week before world leaders descend on Glasgow, Scotland, for crucial COP26 international climate talks. There, they will be expected to hash out a plan to accelerate reductions in greenhouse gas emissions over this decade. FULL STORY 

CHINA PLANS NEW LIMITS ON COAL PRICES IN FIX FOR ENERGY CRISIS
Source: Bloomberg-Oct 25th 
China is considering setting new limits on movements in coal prices that could help ease the nation’s energy crisis, though would threaten to curb profits in the sector.
The top economic planning agency is studying plans for a “price formation mechanism to guide the long-term stability of coal prices in a reasonable range,” the National Development and Reform Commission said Tuesday in a statement. Officials are already carrying out work to assess average production costs and help set a benchmark rate. FULL STORY 

SOYBEAN


CHINA CANCELS 132,000 TONS OF U.S. SOYBEAN ORDERS
Source: Inf News-Oct 30th
According to the confirmation of the United States Department of Agriculture (USDA) on the 15th, due to the severe damage from Hurricane Ida, US private exporters reported canceling orders for 132,000 tons of soybeans for export sales to China in the 2021-2022 market year.
According to British Reuters on the 15th, Chinese private importers have found a new supply of soybeans and purchased 4 to 6 batches of Brazilian soybeans on the 15th, which will be shipped in October and November. According to reports, China's import demand is estimated to exceed 8 million tons per month. Due to the soaring soybean price this summer, the pre-order lags behind. Soybean shipments in October have reached 75%.
According to USDA data, starting from September 1, China's total sales in the market year from 2021 to 2022 will be only about 9.4 million tons, a 41% decrease from the same period last year. FULL STORY 

CHINA’S IMPROVED CRUSH MARGIN STOKES HUGE 40-CARGO BEAN BUYING SPREE
Source: Fast Markets News-Oct 21th  
An improving outlook for soybean crush margins in China has reignited strong buying from the country, with trade sources reporting the purchase of up to 40 cargoes of soybeans over the last week, according to at least three China-based sources and one Brazil-based source.
The volume equates to some 2.6 million tonnes and comes amid fresh rumors that Chinese state-backed traders have also stocked up on multiple wheat cargoes in recent days. While firm details are hard to pin down, traders said that the pace of buying is likely to be maintained in the weeks ahead. FULL STORY 

CHINA'S WHEAT IMPORTS FALL AS ELEVATED PRICES HURT DEMAND
Source: Nasdaq-Oct 18th 
China's wheat imports in September plunged from the previous year, customs data showed on Monday, as elevated international wheat prices and falling domestic corn prices curbed demand for overseas shipments.
China brought in 640,000 tonnes of wheat in September, down 44.8% from a year earlier, data from the General Administration of Customs showed, as international cargoes lost price advantage, traders said. FULL STORY 

CHINA SEPTEMBER SOYBEAN IMPORTS FALL 30% ON SLOWING DEMAND
Source: Reuters-Oct 13th
China’s soybean imports in September fell 30% from the same month the previous year, and hit the lowest for the month since 2014, customs data showed on Wednesday, as poor crush margins curbed demand.
China, the world’s top buyer of soybeans, brought in 6.88 million tonnes of the oilseed in September, down from 9.79 million tonnes last year, General Administration of Customs data showed. FULL STORY 

CHINA SHUTS DOWN SOYBEAN CRUSHING PLANTS DUE TO REGULATION
Source: Oleoline-Oct 15th 
Several soybean crushing plants in China have been shut down as the government curbs energy consumption in a bid to meet stringent emission targets. 
The provinces of Jiangsu and Tianjin were particularly hit as provincial governments curtailed electricity supply. A shortage of coal in the domestic market and surging energy prices this year have also pushed local governments into rationing electricity usage to maintain stable energy supplies during winter.  FULL STORY 

SOYBEANS HIT 9-MONTH LOW ON BIG U.S. STOCKS, LOW CHINESE BUYING
Source: The Western Producer-Oct 4th  
Chicago soybeans fell on Monday, hitting their lowest in around nine months as larger-than-expected U.S. stocks and lack of Chinese buying weighed. Wheat fell after a rally last week, pulling down corn.
U.S. Trade Representative Katherine Tai on Monday will seek negotiations with China over its failure to keep promises made in the Phase 1 trade deal. China agreed to boost purchases of U.S. products such as farm goods including soybeans.  FULL STORY 

CHINA SEEN IMPORTING LESS CORN IN 2021-22
Source: World Grain-Oct 7th  
China’s demand for corn imports in marketing year 2021-22 is expected to moderate as the country’s feed sector sources cheaper grain alternatives and feed consumption increases at a slower rate, according to a Global Agricultural Information Network report from the Foreign Agricultural Service of the US Department of Agriculture (USDA).
After importing a record 30 million tonnes of corn in 2020-21, China is expected to take in 20 million tonnes this year, about 6 million tonnes less than an earlier projection, according to USDA projections.  FULL STORY 

ENERGY


ASIA CRUDE OIL IMPORTS RECOVER IN OCTOBER, CHINA STAYS WEAK: RUSSELL
Source: Nasdaq-Oct 25th 
Crude oil demand in Asia, the world's top importing region, is showing renewed signs of life, with October imports expected to be the highest in seven months and back to pre-pandemic levels.
But the robust gain in Asia's imports this month masks a continuing weak picture for China, the world's top oil buyer. FULL STORY 

CHINA CRUDE IMPORTS DOWN 15% ON YR, GAS IMPORTS AT 9-MTH HIGH
Source: Reuters-Oct 13th  
China's September crude oil imports fell 15.3% from a year earlier, data showed on Wednesday, as companies drew on inventories amid rising global prices and as tightened import quotas continued to constrain purchases.
Meanwhile, natural gas imports rose to the highest since January at 10.62 million tonnes, according to data from the General Administration of Customs, as companies built up inventories ahead of the peak winter heating season amid a shortage of coal for electricity generation that has triggered widespread power outages. FULL STORY 

CHINA COAL AND NATURAL GAS IMPORTS SURGE AS ENERGY CRISIS BITES
Source: Financial Times-Oct 13th  
Chinese imports of coal and natural gas increased sharply in September, as Beijing raced to deal with a spiralling energy crisis that threatens economic growth. 
China imported 32.9m tonnes of coal in September, 76 per cent more than it did during the same month last year, customs data released on Wednesday showed. Natural gas imports rose 23 per cent to 10.6m tonnes compared with the previous year. FULL STORY 

NEW QUOTAS SET TO BOOST CHINA'S CRUDE IMPORTS
Source: Energy Intelligence-Oct 15th 
China has issued a new batch of crude import quotas for independent refiners that should boost the country's crude imports.
The quotas, announced on Friday, will allow the new 320,000 barrel per day Shenghong refinery to begin trial runs next month and the 400,000 b/d Hengli refinery to run at full capacity through the end of this year.
No quotas were granted to the 800,000 b/d Zhejiang Petrochemical refinery, where the ramp-up of the second phase has already been delayed. However, the market expects it to receive additional quotas soon. FULL STORY 

CHINA GASOIL EXPORTS LIKELY TO HIT OVER SIX-YEAR LOW IN OCT ON RISING DOMESTIC PRICES, TIGHT QUOTAS
Source: S&P Global-Oct 8th 
China's October gasoil exports are likely to plunge 47% month on month to a more than six-year low of 310,000 mt because of soaring domestic prices and tight export quota availability, sources with knowledge of the matter told S&P Global Platts Oct. 8.
The country's gasoil exports were last lower at 300,000 mt in March 2015. State-run refiners Sinochem and CNOOC, and privately held Zhejiang Petroleum & Chemical would omit gasoil exports for the second straight month in October, while the estimated outflow from China's top exporter Sinopec is expected to slump 63% month on month to 150,000 mt, sources said. FULL STORY 

A CHANGE IN CHINA’S TAX POLICY IS AFFECTING ASIA'S PETROLEUM PRODUCT TRADE
Source: EIA-Oct 5th  
In June of this year, China implemented a new consumption tax policy that affects imports of two fuels: mixed aromatics, which were blended into gasoline, and light cycle oil, which was blended into diesel. These components were previously exempt from China’s consumption tax. This new policy has reduced China’s imports of these products and its exports of petroleum products.
China increased its imports of light cycle oil and mixed aromatics in 2020 and the first half of 2021, before these products were subject to the consumption tax. Once the tax took effect, China’s imports of light cycle oil decreased from an average of 390,000 barrels per day (b/d) in the first six months of 2021 to 20,000 b/d in July and 30,000 b/d in August, the first two full months after the change in policy. FULL STORY 

SINOPEC GETS STATE APPROVAL FOR NEW LNG IMPORT TERMINAL IN CHINA
Source: Offshore Technology-Oct 1st  
China’s Sinopec has reportedly secured state approval for a proposed LNG receiving terminal, amid an unprecedented electricity crisis in the country triggered by coal shortages.
Planned to be built in Longkou in eastern China’s Shandong province, the terminal will have six million tonnes per year LNG capacity, reported Reuters. The new terminal will feature four storage tanks each with a size of 220,000m³ and a berth capable of handling vessels of 266,000m³.  FULL STORY