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A healthier flow of cargo in the Cape sector saw a 21.4% increase in the TC average

Weekly Report 13/11/2023

Next Week's Predictions:

  • Capes: The Capesize sprang to life after last week's lackluster form. The market witnessed a healthier flow of cargoes and the Capesize T/C Average index closed at $21,473, or up by 21.4% w-o-w. The increased number of cargoes combined with delays due to bad weather in the Pacific gave decent support to the C5 route Australia to China iron ore route. Sentiment: 7

  • Panamax: The Panamax 4TC index managed to creep up this week to $12,437/day, having started on Monday at $11,693/day. It took a while this week to see charterers feeling the pressure and push TC rates up as the long tonnage lists in both ponds slowed down this welcome increase. Sentiment: 6

Dry Bulk:

  • The number of ships waiting to transit the Panama Canal has leaped by 13% in the space of just 24 hours this week as drastic transit cuts kick in at the drought-hit waterway that accounts for 3% of all global maritime trade. Many shippers and shipowners have decided to take alternative routes, aware of how containerships will gobble up the lion’s share of the limited available slots in the coming months.

  • The average cost of transiting the Panama Canal in the seven years since it was expanded has been around $900,000. With daily slots being halved thanks to drought, shippers are willing to fork out four or five times more to get their prized cargoes to Asia.

  • Global seaborne thermal coal supply this year will likely rise 10% to a record of more than 1bn tonnes amid strong Chinese demand and despite ailing European import volumes. Global supply rising this year to 1.06bn tonnes, from 0.96bn tonnes last year, underpinned by a sharp rise in Chinese imports, from 227 million tonnes in 2022 to 340 million tonnes.

  • Exports have been resilient as China has gained significant cost advantages from the depreciation of the yuan and low inflation in labor and energy prices. Productivity gains, especially in new energy-related products, help as well. In the short term, the risk to such an export-led strategy is a sharp slowdown in external demand. As a result, when and if Beijing launches a major stimulus program will largely depend on how long exports can hold up.

  • Preliminary customs data from China highlights a massive dry bulk import growth for the first 9 months of the year, reaching almost 250 million tonnes by the end of September.

Spot Indices and weekly FFA prices:

BDI 10/11: 1,643 - 03/11: 1,462

5TC BCI 10/11: $21,473 - 03/11: $17,690

4TC BPI 10/11: $12,437 - 03/11: $11,698

  • This week's technical comment revolves around Cape 5TC. At $20,500 to $21,000/day, the spot cape index has reached its technical resistance and should be watched carefully next week, as a breakout could warrant a target of $38,000/day.

Weekly traded volumes and open interest:

Open Interest 738,149 lots - (719,659 lots)

Capes/Iron Ore/Steels:

  • China's iron ore port stocks seem to have been kept close to last week's levels. As per MySteel weekly survey, listing 45 major Chinese ports, iron ore port stocks increased a minor 151,000 tonnes w-o-w, concluding at 113.1 million tonnes.

  • Iron ore prices closed this week at 8 months high which is putting pressure on steel mills as their profit margins are being eroded. Dec Iron Ore closed on Friday at $127.7/tonne, a rise of about $3/tonne since Monday.

  • Australian iron ore imports into China rose by 18% w-o-w, while Brazilian volumes fell by 9% with Vale volumes remaining stable.

  • Chinese steel traders' inventory declined again by 3.7%, and mill inventory showed a similar trend by dropping by 3.9%. In contrast, flat steel output rose by 0.35% w-o-w.

  • The Cape physical market bounced back this week with C5 Australia to China iron ore jumped by 16.5% to reach close to $10/tonne. The Atlantic market saw a higher volume of cargo as the main C3 route from Brazil to China reached close to $22/tonne, up by 5.4% this week.

Panamax/Grains/Coal:

  • The Panamax physical market still suffered this week from long tonnage lists which hampered the positivity despite the healthy noises coming out of its larger sister. But with an increased level of fresh cargoes appearing close to the weekend in the North Atlantic, owners felt more confident to either wait to fix next week or to hike their rates.

  • For the ten-month period spanning January-October, China’s total coal imports were 383.64 million tonnes, an increase of 66.7% during the same period last year.

  • India imported 16.3 million tonnes of thermal coal in September, up 29% m-o-m and up 23.2% y-o-y. This is above the forecast at 13.6 million tonnes. Based on the Kpler data processed, Indian thermal coal imports increased to 18.8 million tonnes in October. Including October preliminary data, thermal coal imports have increased for three consecutive months. (Perret Associates)

  • Indian coal-fired generation jumped 7.5% m-o-m and was like the previous 2 months significantly up y-o-y by 33% in October at 111.1TWh. This is a record monthly output with the previous record being 106TWh on May 23. We estimate the steam coal usage for October at 65mt. (Perret Associates)

  • According to Reuters, the U.S. Department of Agriculture confirmed the largest single-day soy sales total since at least late July, of about 0.9 million tonnes of U.S. soybeans. Circa 0,43 million tonnes of the oilseed sales are destined for China. Meanwhile, the remaining 0.476 million tonnes are earmarked as sold to "unknown destinations," which can often mean buyers in China as well.

  • The world is expected to produce 781.98 million tonnes of wheat in 2023/24, which is down by 1.45 million tonnes from 783.43 million mt projected in the October Wasde.

Shipping and Decarbonisation:

  • EUAs were under pressure on the open, again following wider energy markets as European Gas and Power markets were trading lower early on Friday’s session, as Gas supply concerns waned and a continued mild weather forecast. DEC23 EUAs opened at €76.59 trading down to a low of €76.15.

  • Brazilian mining giant Vale is planning to carry out the biggest wind propulsion retrofit ever. The company has chosen to install five rotor sails from Anemoi Marine Technologies on the world’s largest ore carrier (400,000 dwt).

 

DISCLAIMER: The information contained in this message and any attachments are for information purposes only and should not be regarded as advice in relation to investment products nor constitute any recommendation or solicitation of an offer to buy or to sell, any security, product, derivative or instrument in any jurisdiction where such an offer or solicitation would be in violation of any local laws. The information content does not take into account any investment objectives, financial situation or knowledge, and experience, or needs of specific investors. Any price or data contained herein is indicative only and does not represent a determination of the underlying value of any particular instrument. This information may be changed at any time without notice or obligation to update. Neither Consortium Maritime Trading Limited nor Consortium Capital Limited accepts any liability for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained herein or derived therefrom. Consortium Maritime Trading Limited is a private limited company, incorporated and registered in England and Wales and is registered with the Financial Conduct Authority as a small UK AIFM. Consortium Capital Limited is a private limited company, incorporated and registered in England and Wales, and is authorised and regulated by the FCA Financial Conduct Authority.

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