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The coal trade is still active

Despite global efforts to transition several major energy systems away from fossil fuels, the coal trade is still active and growing, giving strong support to the seaborne dry bulk trade. Reviewing the recent dry bulk freight rate rally, the Indonesian coal trade is clearly a significant factor which played a major role in the rally. Indonesia's exports of thermal coal over the first ten months of 2023 increased almost 12% from the same period in 2022, surpassing 413 million metric tons. This growth rate is almost twice the growth rate of total global coal exports and probably Indonesian coal exports will touch new highs until the end of 2023. Indonesia accounted for more than 50% of global thermal coal exports for the first time ever, with second-largest coal exporter Australia far behind with a share of about 19.5% for the first 10 months of 2023 and Russia at the third place with a share of about 11.5%. Despite the western sanctions on Russian coal, Russia hasn't lost significant share in the coal trade as Russia uses railway networks to send coal shipments directly to China or to ports in Turkey. Within the first ten months of 2023, China was proven the best customer of Indonesian coal, as about 44% of Indonesia's total exports (about 183 million tons) had Chinese destinations. China and India have clearly declared their preference to Indonesian coal mainly because its relatively low price compared to the higher grades peddled by rivals such as Australia. The Panamax South China, Indonesia round voyage rates were increased about 51% from 5 September 2023 to 18 October 2023, when the BPI was increased only 9% at the same period. Over the final months of the year, China, India and the other Asian countries usually crank up their coal imports as utilities stock up ahead of the seasonal climb in power demand for heating, creating market's expectations for healthy and strong freight rates until the end of the year.

In China, October imports were limited compared to the previous month, although there is a significant increase in coal, iron ore, copper and grains (including soybeans) imports during the first ten months of 2023 compared to the similar period of 2022. Coal is the commodity which noted the sharpest increase during the first 10 months of 2023 compared to a year ago, with China increasing its coal imports by 68%. This is followed by grains (including soyabeans), iron ore, and copper which increased by 10%, 6% and 9% accordingly during the same period. China's imports in October decreased though on a monthly basis, with copper being the only commodity which noted a slight increase (around 3% up). More specifically, within October China's coal and grain imports declined by 15% each compared to September's levels, while iron ore imports reduced by around 2%. But how those percentage differences have reflected on Baltic dry indices? On 30th October 2023, BDI closed at 1,502 points, very close to one year's ago level of 1,463 points, which was driven by a 34% increase in BCI (justified by the 68% increase in coal imports), while BPI, BSI and BHSI were down by around 10%, 19% and 24% respectively. Furthermore, on 30th October 2023 BDI, BCI, BPI BSI and BHSI were 12%, 15%, 7%, 9% and 1% lower compared to late September 2023 levels.

China has reduced significantly its soybean imports from longer distances, with U.S soybeans exports to China as of late October being down 35% compared to a year ago. China's subdued demand for US soyabeans may be one of the reasons why small/ medium-sized vessels' freight rates were about 19% and 24% lower on late October 2023 compared to the same period of 2022. However, during past week, China booked the most U.S soyabeans in a single day for the first time in at least three months, which may be a positive sign for the dry market. More specifically, China imported around 669,000 metric tons of soyabeans, for shipment from Gulf Coast and Pacific Northwest, constituting around 58% out of total US soybeans export sales.

Sale and Purchase:

On the dry sector, Capesize S&P activity revs up again following the momentum that the sector gained during the past week (BCI around 21.4% up w-o-w). UK buyers acquired the Capesize "Agis" - 182K/2023 Namura which was sold for USD 67.5 mills. Moreover, on the same sector, the Electronic M/E Scrubber fitted "True Cartier" - 181K/2014 Imabari changed hands for USD 37 mills, while the 4-year older "Xin Bin Hai"- 180K/2010 Dalian was sold for region USD 21.5 mills to Greek buyers. Moving down the sizes, the Kamsarmax "Jiangsu New Hantong HT82-278" - 82K/2024 Jiangsu New Hantong found new owners for USD 37 mills and she is going to give delivery in January 2024. It is noteworthy that the vessel was ordered in 2021 for USD 34.25 mills. Last but not least, on the Handysize sector the Electronic M/E OHBS "Iris Harmony" - 38K/2019 Tsuneishi Cebu was sold for region/ excess USD 26 mills. Greek buyers acquired the "Aprilia" - 36K/2017 Jiangdong for region/excess USD 20 mills and the "Lake Dany"- 28K/2008 Imabari for mid USD 8 mills.

On the tanker sector, highlight of this week is Torm's acquisition of 8x LR2 for USD 399 mills (cash & shares transaction: USD 239 mills in cash and approximately 5.5 million new shares). Torm also sold 2x LR1, the "Torm Estrid" - 75K/2004 HHI and the "Torm Ismini"- 75K/2004 HHI for USD 20 mills each. On the chemical sector, clients of Stainless Tankers acquired the "Monax" - 21K/2005 Usuki and the "Marmotas"- 20K/2005 Usuki for USD 27 mills enbloc.

Xclusiv Shipbrokers Inc.