East Asian thermal coal imports firm, shipments into Europe lag demand

Iron Ore & Steel: China’s steel climbed in early September, but remained lower y/y

• Global seaborne iron ore exports totalled 32.91 Mt in the week commencing 9 September, above the 52-week average and the year-ago level. Departures from Australia hit a two-month high of 19.48 Mt last week, as some miners accelerated shipments ahead of the end of the quarter for reporting purposes.
• With mill margins coming under pressure from lower steel prices, Chinese crude steel production slid to an eight-month low of 77.92 Mt in August, down by 10.40% y/y. Rebar margins were hit particularly hard in recent weeks as traders cleared out stocks ahead of changes in manufacturing standards. This latest decline left crude steel output over January-August down by 3.30% on the same eight months last year at 691.41 Mt. A slide in steelmaking raw material prices, and a restocking of rebar that supported end-product prices, helped to improve mill margins at the start of September. This was reflected in China Iron and Steel Association (CISA) member mill output which edged up to average 1.94 Mt/day over the first ten days of the month, although still sharply lower y/y.
• The decrease in steel output and improved mill margins have helped to stabilise steel prices in China. After hitting multi-year lows on 6 September, the most actively traded January 2025 rebar and hot rolled coil (HRC) contracts on the Shanghai Futures Exchange (SHFE) have managed to find some support in recent days, closing at 3,150 yuan/t ($444.84/t) and 3196 yuan/t ($451.34/t), respectively, almost flat w/w. We expect the steel prices to stabilise or see some modest upward movements in the coming months if there is no significant increase in output.

Crude steel output at CISA member mills (Mt/day)

Source: CISA

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Coal: ARA stocks trend lower on slow arrivals, typhoons weigh on deliveries to north-east Asia

• After retreating to the lowest level since Jan 2023 last week at 1.76 Mt, Australian metallurgical coal exports rebounded sharply to 4.05 Mt in the week beginning 9 September. Shipments out of Gladstone and Hay Point were resurgent, with the latter at a multi-month high on strong exports from both terminals. Scheduled dredging work began at the Port of Hay Point, which includes Dalrymple Bay Coal Terminal, began in late August and is set to end this month. Even accounting for short term port disruption in Australia, there has been a marked slowdown in metallurgical coal exports to India. Just five cargoes to India, totalling 0.62 Mt, have been shipped since the start of September.
• Weekly thermal coal imports increased in the seaborne thermal coal market last week, in line with firm demand from key buyers. Aggregate receipts rose by 1 Mt w/w to 20.3Mt.
• China’s receipts of thermal coal firmed on the week, despite the eastern coast of the country being hit by a typhoon last week. China imported some 6.3 Mt of thermal coal last week, up by 500,000t w/w. The country is bracing for another typhoon this week. Chinese authorities issued a yellow weather alert for Typhoon Pulasan, which is expected to make landfall in the coal-importing region of Zhejiang today. Some 500,000t and 840,000t of thermal coal are scheduled to be discharged into the region this week and next week, respectively, at the time of the report.
• ARA thermal coal stocks continue to trend lower, as coal flows to the transshipment hub are rising at a rate lower than the increase in coal burn in the region. The Capesize Flag Seaman, which discharged South African coal to EMO terminal, was the only thermal coal cargo delivery that took place last week. No thermal cargoes are scheduled to arrive at the terminal this week, suggesting inventories are likely to decline further, given the increase in coal-fired generation in Germany in recent weeks.

ARA coal stocks (Mt)

Source[:  Montel

• German coal-fired generation averaged 3.5GW over 1-18 September, up from 2.2GW over the same period last month, despite firm wind output capping the need for coal burn this week. European buyers sourced some spot South African cargoes for October-delivery earlier this week, which should support delivery volumes in the next month. Meanwhile, thermal coal receipts in Poland are still yet to pick up as coal stocks in the country are elevated after import volumes exceeded consumption volumes in the past two years.

Germany power generation (GW)

Source: Kpler Power

• Indian thermal coal receipts rose for the third consecutive week, rising to 3.18M t during the week ended on 15 September. Indian coal burn has recovered since the end of August, with output averaging 171GW last week, but still down by 8GW y/y. Most of the coal shipments were sourced by power sector buyers, with Indonesian receipts making up around 90pc of total shipments.  Indian utilities held 39.09 Mt of coal stocks on 18 September, down from 39.69 Mt last week.

India weekly coal-fired generation (GW)

Source: NPP

• Thermal coal shipments to Japan remain elevated, as higher-than-usual temperatures are lifting firm power demand in the country. South Korean receipts held firm as well, with aggregate receipts from Colombia holding firm at 335,000t. South Korean utilities recently awarded tenders to South African supply, which should increase deliveries from this origin in the coming months. The last South African coal shipments into South Korea took place in the last week of July.

China, South Korea, Japan weekly thermal coal imports (Mt)

Source: Kpler

Grains & Oilseeds: Russia ships record amount of wheat in August, Sep to come close

• Russia exported 5.5 Mt of wheat in August, the highest ever for any month. Shipments indicate that September exports are also likely to cross 5 Mt. Despite an import ban, Turkiye remained the second-largest buyer of Russian wheat (after Egypt). Traders are holding Russian wheat prior to customs at Turkish ports, in a speculative move. A front-heavy Russian export program means that lower supplies and higher prices can be expected later in the season, especially given the lower crop this year. Traders will be able to sell the wheat in Turkiye if the import ban is removed, else they will look to resell it to other importing countries when Russian supplies subside.
• Dryness in parts of Ukraine and Southern Russia has significantly reduced the corn crop in the region. In Ukraine, at least a 20% reduction in corn production is expected. Dryness is now raising concerns over planting of winter grain. Wheat and rapeseed plantings will start in earnest by the end of September and will see reduction in area in the absence of sufficient moisture.
• Similarly, in Brazil dryness raising concerns about soybean planting. Planting was allowed to start in the main producing state of Mato Grosso from 6 Sep, but the state has been slow to come out of its dry winter season. As of now, there is no rain forecast for the next 7 days. The market is afraid that the dry planting weather combined with low prices might reduce Brazil’s soybean area, resulting in lower 2025 production.
• US corn exports remain strong, with the US taking a larger share of the market y/y. Exports from Brazil are lower than last year due to a continued push to export soybeans and Chinese demand for more soybeans (less corn) compared to last year. Brazil overtook the US to become the world’s largest export of corn in 2023 (calendar). The US is likely to win back the title this year.

Russian wheat export seasonality, including projections (Mt)

Source: Kpler Insight

Minor Bulks: China’s aluminium production hit a new record

• Global seaborne bauxite exports retreated to a three-week low of 3.09 Mt last week as the ongoing rainy season (May to October) continues to soften Guinean shipments, which managed 1.84 Mt, down from 2.01 Mt a year earlier. However, global shipments remained significantly higher than the seasonal average or the year-ago level as Australian and Brazilian loadings remain elevated.
• Last week, amid a dispute over salary increases, SD Mining workers and local residents blocked the roads leading to the company’s bauxite mine and looted stores and other properties in the vicinity. As one of Guinea's largest bauxite producers, SD Mining is targeting 8 Mt of production in 2024 and expects to reach its full capacity of 10 Mt next year. Due to the availability of stockpiles, the incident is unlikely to have an immediate negative impact on exports. However, as friction between local communities and mining companies in Guinea has increased in recent months, long-term risks need to be monitored.
• In China, the output of primary aluminium hit a fresh monthly record of 3.73 Mt in August (+2.50% y/y), buoyed by abundant hydropower availability in Yunnan, which has sustained profitability and allowed smelters to run at high capacity. However, the scope for further production growth is limited, with the August smelter utilisation rate reaching 97%—close to the practical limit. Since 2017, China’s total primary aluminium capacity has been capped at 45 Mtpy, and there are no signs of a policy shift to capacity expansion in the coming years. In the short term, Yunnan is approaching the end of its wet season, and as the dry season begins in late October, aluminium production may be curtailed to prioritise electricity supply for residential use.

China’s primary aluminium output (Mt)

Source: Kpler

Dry Bulk Freight: Atlantic markets firm

• The number of Capesize (100k+ dwt) vessels waiting to load iron ore at the Port of Dampier has spiked in recent days, with a peak of 15 vessels waiting at one point last week. This compares to a more typical levels of below ten vessels waiting for much of this year. However, this is likely to unwind in the short term amid lower Pacific iron ore chartering in recent days due to holidays in China. The C5 West Australia-China Capesize iron ore spot voyage rate have been rangebound between $11-12/t since late August, Baltic Exchange assessments show.
• By contrast, the Tubarao-China iron ore spot voyage rate has firmed to the highest point since the first week of July at $28.23/t. Rates for late October to early November loading rose, with the China-Brazil round-voyage timecharter rate climbing by $1,330/day w/w to $28,720/day.
• After trending lower since mid-June, average Panamax earnings have found a floor and started to firm. The 5 TC average climbed by $1,133/day w/w to $13,753/day, although it is still below the same point in each of the past three years. Growth was driven by the Atlantic market, the round-voyage rate rose by $2,675/day to $11,835/day, as the combination of a seasonal upturn in grain cargo availability in the US Gulf and firmer European demand for thermal coal supported Panamax chartering activity. By contrast, Pacific Panamax earnings slipped lower. Rates should see further modest firming in the short term.
• Strike action at US East Coast and Gulf ports moved a step closer this week after the Biden administration indicated it would not use special powers to force unionised longshoremen back to their posts should strike action slated for early October go ahead. Workers are looking to secure improved pay and conditions while resisting automation of port operations that could see jobs go. The current labour agreement expires on 1 October and extended strike action would likely force rerouting of cargoes and push up further already elevated container freight rates. This could then have a knock-on effect for bulkers with more of the latter chartered to carry containers.

Panamax 5 TC average: seasonal view ($/day)

Source: Baltic Exchange

Key Dry Bulk Market Developments

Source: Kpler

Dry Bulk Port Congestion

Source: Kpler

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