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China, the world's second-largest economy suffered a sharp decline in exports and imports

China, the world's second-largest economy suffered a sharp decline in exports and imports in July in terms of value, adding to a prolonged trade slump. In dollar terms, exports fell 14.5% year over year, the steepest drop since the start of the Coronavirus pandemic in February 2020, while imports declined 12.4%, the largest decline since January 2023 when a wave of infections hit the mainland. That reduction is more than expected, if we consider that major commodities prices have significantly reduced y-o-y, with coal price being 65% down, while iron ore, steel and crude oil prices have fallen by around 9%, 10% and 13% respectively. In the meantime, in July, Chinese banks extended the fewest monthly loans since 2009, indicating continued sluggish demand in the world's second-largest economy and raising the likelihood of sustained deflationary pressures. Banks made only RMB 345.9 billion ($47.8 billion) in new loans in July, down from RMB 3 trillion in June.
However, in terms of quantities, we have witnessed a significant increase in both China’s main imports and exports. More specifically, from January to July 2023, China exported 39,796,000 tonnes of steel products, almost 28% up compared to the same period of 2022. A similar increase was also noted in China’s main imports. During the first 7 months of 2023, China has increased slightly grain imports by 5% and iron ore imports by 7% to 96,959,000 tonnes and 669,456,000 tonnes accordingly compared to the same period of 2022. China’s coal and lignite imports stood at 39,260,000 tonnes in the first seven-month period of 2023, an increase of almost 90% in comparison with January to July 2022’s imports, with hopes that increase may continue at a steady pace for the rest of the year due to favourable international market prices and the country's zero-tariff policy. Steel products were the commodity that reduced both in terms of quantity and value, as China’s steel products imports fell to 4,419,000 tonnes from January to July 2023, almost 33% down compared to the same period of 2022. Furthermore, from January to July 2023, China imported 4,504,000 tonnes of refined petroleum products almost double compared to the similar period of 2022, while also increasing its crude oil imports by 12% to 43,686,000 tonnes.
The paradox of Chinese imports decreasing in value but increasing in quantity has not left China’s routes unaffected. Reviewing the major Baltic TCEs from Baltic Exchange, as of 10th August, the Capesize China - Brazil round voyage has increased by around 15% in a yearly basis. Moving to Panamax TCEs, South China, Indonesian round voyage (BPI-P5_82) paid USD 7,747/day on 10th August 2023, almost 51% down compared to a year ago. During the same period, Supramax rates have lost momentum compared to a year ago. More specifically, the US Gulf trip to China – South Japan (BSI- S1C_58), the North China trip to West Africa (BSI – S3_58), and South China trip via Indonesia to South China (BSI-S10_58) are down by roughly 46%, 66% and 47% respectively. On the Handysize, the North China-South Korea-Japan trip to South East Asia (BHSI - HS7_38) and the North China-South Korea-Japan trip to North China-South Korea—Japan (BHSI – HS6_38) have decreased by around 60% each during the past year. On the other hand, Russian’s invasion of Ukraine as well as the western sanctions boosted the wet market, skyrocketing freight rates. Focusing on China’s crude tanker routes, the West Africa to China (BDTI-TD15), the US Gulf to China (BDTI-TD22) and the Middle East Gulf to China (BDTI-TD3) have increased by 60%, 88% and 28% respectively.

Sale and Purchase:

On the dry news, it was a very active week on the Capesize sector, as 4 vessels found new owners. The Capesize “Mount Apo” - 176K/2012 Jiangsu Rongsheng was sold for USD 24.75 mills to clients of Peter Doehle. Furthermore, the “Cape Agamemnon” - 179K/2010 Sungdong changed hands for USD 22.5mills, while the one-year older “Ariadne” - 180K/2009 Daewoo was sold for USD 20.4 mills. Greek buyers acquired the Kamsarmax “Navios Southern Star”- 82K/2013 Tsuneishi for USD 21.5 mills. Finally, a pair of Handysizes, the “Tomini Norte” - 38K/2016 Avic Weihai and the “Tomini Ghibli” - 38K/2016 Avic Weihai were sold enbloc for mid/high USD 17 mills each.
The wet S&P activity was subdued this week with a handful of sales to report, due to the summer’s holidays peak. On the Suezmax sector, the Scrubber fitted “Monte Toledo” - 151K/2004 Universal was committed for USD 35.5 mills to Nigerian buyers. Greek buyers acquired the LR1 “Lila Alabama” - 73K/2004 Samsung for USD 18 mills (which is an old sale as she has already delivered). On the MR2 sector, the “Pro Jade” - 47K/2003 HMD found new owners for low USD 12 mills. Last but not least, the Chemical “Celsius Mayfair”- 20K/2007 Fukuoka changed hands for low/mid teens (old sale).