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Weak Chinese macroeconomic data are a cause for concern in bulk carrier markets, though there are glimmers of light in the darkness. China imported a record 576.14m tonnes of iron ore in the first half of 2023, a 7.7% year-on-year increase. Satellite tracking firm Kpler says August imports could be 108.5m tonnes. Any growth in iron ore imports for the full year would be the first annual growth since 2020. Chinese domestic iron ore output is down about 3% this year, apparently due to safety checks at mines. Meanwhile, larger than average seasonal floods in China, following on from recent heatwaves, are jeopardising China’s food production, particularly rice, wheat and other grains. China may end up importing rice this year. Erratic rainfall patterns in India have affected crops this year too. The government has banned exports of non-basmati white rice – normally it supplies 40% of global exports. Thai crops are down due to too little rain. Rice prices are at a 12-year high. Researchers at Fitch Solutions forecast an 87m tonne deficit in rice production this year, leading to a scramble for cargoes in the global south. The International Grains Council has increased its total word trade forecast for 2023 by 3m tonnes primarily because of an increase for maize and despite predicting a 2m tonne fall in rice trade following the Indian ban. Global wheat and coarse grains output is forecast to be the second largest on record at 2.294bn tonnes, supplying a 2% increase in global consumption. Recent data from India’s Ministry of Commerce show India imported 254m tonnes of coal in fiscal 2022/23, some 22% more than in the previous year, even as domestic coal production rose to 893m tonnes. Imports are likely to grow further as electricity demand continues to soar. The IEA, in a July 2023 report, noted a 1.5% increase in global coal consumption in H1 to about 4.7bn tonnes with 5% increases in China and India offsetting 24% and 16% reductions in the EU and US respectively as thermal coal prices fell. The IEA expects a 7% increase in coal trade in 2023. In the freight markets, these developments have been very positive for panamaxes and mildly positive for capesizes. There has been little joy however for smaller geared bulkers. The C5 average for capesizes added 5% in the first three weeks of August compared to July with earnings advancing from around $13,700 to around $14,400. Brokers reported plenty of available capesize ships in the market even with firm demand, possibly due to the continuing uncanny lack of congestion. However, as August matures, brokers are reporting less enquiry and there are concerns that in the short term this rally has run its course. Panamax operators have enjoyed the last two months. The Baltic Panamax Index rose from around 900 points in late July to over 1,500 points by mid-August. In the Atlantic, kamsarmaxes trading anti-clockwise round voyages from Europe to the Americas enjoyed a 68% increase in rates in the month to August 18 to around $14,100 a day. North Pacific kamsarmax round voyages originating in North Asia enjoyed a 52% increase in rates over the month to around $9,500 a day. Kamsarmaxes on the South China Sea round voyage with coal cargo enjoyed a 40% daily hire rate increase to around $10,650 a day. Supramaxes on the same South China Sea round voyage were rated by the Baltic Exchange at $9,300 per day on August 18, a 31% increase over 30 days, while rates for supras exiting China to load coal in Indonesia for EC India delivery enjoyed a 32% increase in rates to around $10,150 a day over the month to August 18. Rates have slipped a little in the North Atlantic due to a lack of cargoes but ships on the long West Africa-South America-Far East voyage were reported to be earning over $13,500 a day in mid-August, up nearly 40% compared to mid-July. Overall the Baltic S10 supramax average remains stuck around $8,000 a day as it has since June, but there are hopes for a stronger performance as Q3 turns to Q4. Handysize bulker earnings have drifted slightly in August, with the Baltic’s H7TC averaging $7,350 or so for the first three week of the month compared to $7,400 for July and $8,680 for June. In the Pacific, rates on the NE Asia – WCNA – NE Asia round voyage hs added 15% to creep up to $8,275 or so by the third week of August while SE Asian round voyages added 21% to move above $9,000 a day. In the Atlantic, rates have come up from very low levels in July with voyages from Europe to ECSA up 15% to broach the $5,000 per day level and voyages from Europe to the USG up 18% to reach a comforting $8,000 per day. The Baltic Dry Index has halted its four-month losing streak to turn up slightly in August. Is this the start of the usual seasonal bull market? That still depends on your view of China, but not as much as once it did.

Dry bulk learning not to be so reliant on China

Other Asian destinations are providing some solace as the People’s Republic fails to fire this year.

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