Iron ore port stocks in China have slipped to below the 100m ton mark for the first time since September 2020, but an armada of big bulkers heading from Brazil and Australia suggests this low point will pass quickly.
Inventories of iron ore peaked in February 2022 at 144m tonnes and have been unwinding ever since.
“The recent upswing in Cape rates, supported by increased China-bound iron ore cargoes, suggests Chinese buyers may be looking to replenish inventories,” analysts at Jefferies predicted.
October has been very positive for capesize rates, which have topped $30,000 a day for the first time this year. Freight rates for iron ore from both Brazil and Australia to China have ballooned in October with the former pushing to over $26 per tonne and the latter advancing towards $11 per tonne with $10.70 being fixed for early November cargoes, suggesting that the bull market has some momentum.
Clarksons Research notes that tonnage in the Atlantic remains tight, which may provide support going forwards.
“Iron ore imports into China have found support from higher output growth of blast furnace iron this year (as opposed to scrap steel-fed furnaces) than for steel overall,” analysis from Braemar points out, adding that China’s iron ore import growth this year owes largely to export-driven expansion in steel production.
“The capesize market has gone back to its historic roots and we are in a very strong Q4 comparatively speaking, so far,” a recent report from BRS stated. This situation has left many people “scratching their heads” BRS added, wondering how positional this market is, how much is demand driven and how much is sentiment.
