The Dry Bulk Weekly Review in Shipfix Data
A distillate of the past week’s key messages extracted from Shipfix’s unique data set. The forward-looking nature of our data provides valuable insights into the trade flows of the near future.
Chinese Steel Exports Remain Robust Despite Easing
While iron ore prices have seen a significant recovery in the past two weeks, prices remain nearly fifteen per cent below the levels recorded in the middle of March. An underwhelming Chinese industrial recovery following the removal of the country’s strict anti-Covid measures has contributed to the weak sentiments. However, continued soft economic data from the world's second-largest economy has raised the prospects of a new round of stimulus, and iron ore has recovered some lost ground.
As a result of the weak recovery, Chinese domestic demand for steel has remained soft, and more of it has gone on export. Following a peak in cargo ordering activities for steel loading in Chinese ports in March, volumes saw a decline in April but have recovered somewhat during the past month. Given the cargo order data's forward-looking nature, the March peak has translated into robust physical shipments in the past month. The rebound in May will also see export volumes remaining strong in the coming months. Hence, iron ore prices are likely to remain firm, especially if the solid exports are combined with a resurgent domestic demand amid more economic stimulus.
Average cargo sizes for steel products loading in China have been trending higher in the past two years. After peaking in March, the typical cargo size has seen two straight months of declines. However, the drop has been relatively small, and it remains too early to speak of a new trend.
Coal Exports from Russian Baltic Trending Lower Despite Increasing Demand from India
Cargo order volumes for Russian coal loading in the Baltic Sea bound for ports in Asia dropped to their lowest levels in a year during the past month. The loss of the European market in the wake of sanctions has seen an increase in demand for seaborne transportation of coal to the more distant shores in Asia. However, aggregate monthly order volumes have been trending lower year to date. The low reading in May is, to a great extent, the result of a substantial drop in demand from Chinese importers of the fossil fuel. At the same time, India has become an increasingly important market for Russian coal loading in Baltic terminals. Hence, rising volumes of Russian coal from the Baltic can be expected to discharge in Indian ports in the coming months.
The past month also saw a minor increase in the average cargo sizes bound for China and India. After trending lower during the past few months, the typical shipment to both destinations was around 60,000 tonnes during May.
Indian Coal Imports Likely to See a Decline in Coming Months Following Recent Peak
While European coal imports remain on a downward trend, Indian imports of the commodity have been buoyant. A spike in cargo order volumes for coal discharging in India during March has translated into very substantial import volumes during the past month. However, it looks unlikely that the high import volumes will be sustained in the coming months. After peaking at the end of the first quarter, demand for seaborne transportation of the fossil fuel to the South Asian country has softened. The forward-looking nature of Shipfix’s cargo order data set suggests that actual monthly imports could decline by around ten per cent in the coming months.
Average cargo sizes for shipments from Australia and Indonesia to India have seen a mean reversion during the past month amid marginal declines. In contrast, the average for imports from South Africa has remained on the upward trajectory that began during the early parts of the year.
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