Iron ore market softens, while Atlantic coal and Capesize freight firms

Iron Ore & Steel: Iron ore prices are falling to the $100/t mark

• Global seaborne iron ore exports reached a six-week high of 32.42 Mt in the week commencing 4 November, buoyed by a four-month high in departures from Australia, where Pilbara miners ramped up shipments from the seasonal low in October. In Brazil, exports have continued their downward trajectory after peaking in August, with loadings dropping to 6.85 Mt last week, the lowest since early July. However, a temporary uptick in shipments is anticipated in December as miners seek to expedite exports ahead of the rainy season.
• On the demand side, Chinese imports concluded at 26.17 Mt last week, the third highest since March this year as rising steel output continues to support iron ore consumption. Crude steel output by China Iron and Steel Association (CISA) member mills averaged 2.09 Mt in the first ten days of November, the highest since late July and representing a 6.36% growth y/y. However, early data suggest a possible pullback in crude steel output for the remainder of November, with production of molten iron and pig iron showing a slight decline relative to late October levels.
• In South Korea, iron ore imports totalled 1.03 Mt last week, a 14-week low and significantly below the five-year seasonal average of 1.53 Mt. However, the decline is unlikely to be directly related to the fire at POSCO’s Pohang Works on 10 November, which occurred at the No.3 FINEX plant (capacity: 2 Mtpa of molten iron). Although the incident may partially halt operations for about a week, POSCO has stated that the overall production should remain unaffected, as other units can make up for the production loss. The company’s assessment appears reasonable, as there is operational flexibility to increase production. POSCO’s crude steel output reached 25.90 Mt in the first nine months of 2024, down 2.87% y/y.
• Iron ore prices have struggled to gain traction in recent days, as Beijing’s latest stimulus announcements, unveiled after last week’s parliamentary session, failed to meet market expectations. As of 13 November, the benchmark SGX and DCE iron ore contracts declined 3.24% and 3.26% w/w, to $100.52/t and 756 yuan/t ($104.64/t), respectively. Without further positive news, it appears increasingly likely that the SGX second-month contract will dip below the benchmark $100/t mark in the coming trading days.

Benchmark SGX TSI Iron Ore CFR China (62% Fe Fines) price falls to the $100/t mark, again ($)

Source: SGX

Coal: cif ARA market strengthens with firm coal burn, Chinese demand holds steady

• Seaborne thermal coal imports gained by around 1.5Mt w/w to 20.91Mt, in line with firm demand during the winter season.
• China continues to import strong volumes, with weekly deliveries rising by 57,000t w/w to 8.5 Mt last week. But mild temperatures in the southern part of the country are reducing the need for thermal generation. Zhejiang’s Zhoushan and Guangdong’s Guangzhou have seen less than 2 heating degree days in the first half of November, compared with 16 heating days a year earlier.

Guangzhou & Zhoushan heating-degree days (base 16°C)

Source: Meteostat

• Aggregate coal deliveries to Japan, India and South Korea gained by 800,000t w/w to 4.6 Mt from a low base caused by weather disruptions in the previous week. Japanese power generation company Tohoku Electric is planning to bring the 800MW Onagawa nuclear reactor online in the coming days. The reactor was shut down on 4 November after only six days of activity. Before that the reactor had been offline since the Fukushima disaster in 2011.
• Taiwan’s state-owned power generation company Taipower announced that it is planning to decommission its coal plants and will build gas plants to meet the country’s power demand. The company is planning to dismantle four 550 MW units of the 5.5 GW Taichung power plant and keep the remaining six units to serve in reserve capacity until at least 2032.
• India’s coal receipts gained 280,000t w/w to 2.8 Mt, but coal stocks have stabilised in the country in recent weeks suggesting import appetite likely to be muted. Indian coal-fired power plants held 36.6 Mt of coal in stocks on 14 November, of which 5.16Mt was imported supply. Coal-fired generation averaged 142 GW last week, which was down by around 5 GW y/y.

India coal-fired generation (GW)

Source: NPP

• Europe-delivered coal prices in the physical market rose by around 6pc or $6/t w/w to $122/t this week, in line with strong coal burn in the region.
• Coal-fired generation in Germany mostly remained above 5 GW this month and rose to as high as 7 GW yesterday, the highest since 7.2GW on 18 January. Wind generation has been unseasonably low since the beginning of this month, with output averaging 6.6 GW over 1-13 November down from 26 GW during the same period last year.

Germany thermal vs renewables generation (GW)

Source: Kpler

• Colder-than-usual weather is also supporting thermal generation in Germany. Berlin saw 134 heating-degree days over 1-13 November, compared with 88 last year.

Berlin heating-degree-days (base 16°C)

Source: Meteostat

• The Russian government is going ahead with the proposed 13.8% increase in rail tariffs next month. The increase in railing costs will pressure margins for Russian coal producers which are already struggling with logistic costs. The change in tariff will make temporary surcharges of tax (1.5%), capital repair (7%) and safety (1%) in rail tariff permanent, suggesting logistic costs of Russian coal will remain elevated.              
• Coal railings on the Cerrejon railway resumed after the 15-day blockade was lifted on 12 November. The Capesize Blue Lhotse is heading towards Turkey after the vessel departed from the port on 11 November. The Capesize Shandong Heng Chang is being loaded at the port since 12 November and the Panamax Rt. Hon. Paul E. Martin was heading towards the berth at the port earlier today. There are six vessels anchored around the Puerto Bolivar at the time of the report.  

Puerto Bolivar vessel queue

Source: Kpler

Grains & Oilseeds: Wheat loses value against other grains as dollar surges

• Led by the strength of the US dollar, wheat prices fell sharply this week, breaking away from other grains. With only 10% of the world’s exports coming from the US, wheat is the least ‘dollar-denominated’ of the major grains and is likely to maintain value in international currencies. With corn failing to follow this move, the wheat corn (Dec) spread contracted significantly, closing below ~120 cents for the first time since March 2024.
• US October seaborne corn exports were the second-highest on recent record for the month. The record was set in Oct 2018 when strong demand from Japan and Korea and the absence of corn at other major origins allowed increased US exports. In usual years the US would have to compete with Ukraine and Brazil for exports in Q4, but faltering supply out of other origins has allowed US corn exports to lead.
• Corn 2024 crop losses in Europe and the Black Sea growing regions have increased prices in the region, allowing for US corn to price into feeding centres of Spain and Portugal. US shipments to Europe are the highest in 8 years. The US balance sheet is well supplied and can absorb the additional European demand. However, prolonged trade will mean that US corn is cheaper than Ukraine corn at consumption centres in Southern Europe.

US monthly corn exports to Europe, by destination country (kt)

Source: Kpler

Minor Bulks: Have alumina prices peaked?

Minor Bulks: Have alumina prices peaked?

• Global seaborne bauxite exports totalled 3.76 Mt last week, staying above 3.70 Mt for a fifth week in a row on the support of stronger Guinean shipments in the dry season.
• However, uncertainty continues to cloud the outlook for Guinean bauxite exports as issues between local customs authorities and Emirates Global Aluminium (EGA)’s Guinea Alumina Corporation (GAC) are yet to be resolved. Transport of bauxite from GAC mines to Port Kamsar has reportedly ceased, this follows the suspension of the company’s exports in mid-October. To maintain feedstock for its Al Taweelah alumina refinery EGA appears to be sourcing bauxite from alternative suppliers in Australia. Kpler has identified the Capesize vessel Navios Aster, carrying 0.17 Mt of bauxite, bound for the UAE, with EGA suspected as the buyer.
• In Brazil, Alcoa declared force majeure on 6 November for bauxite shipments from Juruti Port after a stranded vessel obstructed the terminal access channel. Mineracao Rio do Norte, another significant bauxite exporter, has not issued a similar statement but may also be impacted by the disruption. Amid record low water levels in the Amazon basin due to drought conditions, Brazil’s bauxite exports have already declined, totalling 0.45 Mt in both September and October, compared to a five-year high of 0.68 Mt in August.
• The recent supply issues in Guinea and Brazil drove the most-traded January 2025 alumina contract on the Shanghai Futures Exchange (SHFE) to a new peak of 5,382 yuan/t ($746.06/t) on 11 November. However, prices have since eased following reports that some aluminium smelters may cut production due to narrowing profit margins linked to the recent alumina price surge. The softening was aided by warnings from the China Nonferrous Metals Industry Association against speculative trading. The contract eventually closed 1.25% higher w/w at 5,244 yuan/t ($725.86/t) on 13 November. Although alumina prices may retreat further in the short term, contracting domestic bauxite supply in China means they are likely to stay elevated in the foreseeable future.

Global weekly seaborne bauxite exports have stayed above 3.70 Mt since October (Mt)

Source: Kpler

Dry Bulk Freight: Capesize market firms, while Panamax and Supramax earnings diverge

• A combination of increased iron ore chartering activity and port congestion in China helped to support a second consecutive week of gains in Capesize earnings. The 5 TC average rose by $6,417/day net w/w to $24,347/day. Although increases were greatest in the Atlantic, this represented a catching up with earlier gains in the Pacific, as opposed to resurgence in regional demand.
• Congestion at discharge ports in Northern China is running sharply ahead of the year-ago level as a combination of bad winter weather and high iron ore port stockpiles slows the discharge of vessels. The number of Capesize (100k+ dwt) ships waiting to discharge at Northern Chinese ports has average near to 40 vessels in the month to date. This compares with 21 in the same month last year.
• Sub-Capesize vessel earnings failed to follow the larger ships higher. The Panamax 5 TCs edged up by $322/day w/w to $10,921/day. Such has been the recent weakness of the Panamax market this was a three-week high. By contrast, the Supramax 11 TCs retreated by $864/day over the same period to $13,009/day. One factor in this divergence is likely the competitively priced Panamaxes taking a greater share of regional trade. At $12,581/day, the Panamax Pacific round-voyage rate was up by $666/day w/w, while the Supramax equivalent dropped by $2,012/day over the same period to $10,794/day, The Panamax share of Pacific loading dry bulk trades has increased over the past two weeks, while the Supramax share has declined.

The Capesize upturn has not lifted other markets ($/day)

Source: Baltic ExchangeWeekly Pacific dry bulk carrier cargo loadings by vessel type: Panamax types take market share (Mt)

Source: Kpler

Key Dry Bulk Market Developments

Source: Kpler

Dry Bulk Port Congestion

Source: Kpler

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