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China's exports surged in August

China's exports surged in August at the fastest pace in nearly 18 months. This significant growth, up 8.7% in dollar terms, suggests that manufacturers are rushing to fulfil orders before tariffs imposed by various trading partners take effect. However, imports grew at a much slower rate, increasing by only 0.5% and falling short of expectations. This contrasts with the 7.2% growth seen in July. China's exports have continued to grow despite facing increasing trade barriers imposed by several countries. Even with the imposition of higher tariffs on Chinese electric vehicles by the European Union and announced plans for significant tariffs on various Chinese goods, including electric vehicles, by the United States and Canada, China's exports to the United States, its second-largest trading partner, continued to surge in August, increasing by 13.4% year-over-year. While exports to the Association of Southeast Asian Nations and the European Union, China's top and third-largest trading partners, respectively, slowed down slightly, they still recorded solid growth rates of 9.0% and 5.0% respectively. China's imports of commodities were down in August, indicating a weak domestic economy. Iron ore imports fell by 4.73% from a year earlier, due to weak demand in the construction sector. Although China bought a record 12.14 million metric tons of soybeans in August, this was not a good sign for the country's future export performance.

The International Energy Agency (IEA) has revised its forecast for global oil demand growth in 2024 to 910,000 barrels per day (bpd), reaching nearly 103 million bpd, compared to a 2.1 million bpd increase in 2023. This reduced growth forecast is primarily due to China's economic slowdown and shift towards electric vehicles and high-speed rail, which are reducing demand for oil-based transportation. The IEA now expects global oil demand to plateau by the end of the decade, earlier than previously predicted. China, the world's largest oil importer, is transitioning to a low-carbon economy, reducing its dependence on oil. This shift, combined with the broader economic slowdown, could lead to a significant slowdown in China's oil demand growth, which surged post-COVID. China's oil demand growth forecast has been slashed from 300,000 bpd to just 180,000 bpd for 2024. This is largely because China's oil consumption has been declining for four consecutive months, a significant contrast to the 1.5 million bpd annual growth seen in 2023. In the meantime, the Organization of the Petroleum Exporting Countries (OPEC) has once again lowered its forecast for global oil demand growth in 2024. This marks the second consecutive month of downward revisions. While the projected growth remains significantly higher than pre-pandemic levels, OPEC has reduced its estimate from 2.1 million barrels per day (bpd) in August to approximately 2 million bpd for the current year.

In the United States, the US Trade Representantive (USTR) has announced it will impose Section 301 tariffs on a range of commodities from China, including steel, aluminum, lithium-ion batteries, and critical minerals. These tariffs are intended to protect US businesses and workers from unfair trade practices. The USTR has set the tariffs at 25% on a range of commodities, with the tariffs to come into effect on or before September 27, 2024. The tariff rate on certain steel and aluminum products under Section 301 has increased from 0-7.5% to 25%, while the tariff for semiconductors has been set at 50% from 2025. This is likely to impact both dry bulk and container trade, as Chinese imports to the US total around $450 billion, with approximately $21-22 billion consisting of iron, steel, aluminum, and other minerals.

Sale and Purchase:

Dry:

The Scrubber fitted Mini-Cape "Kitaura" - 119K/2012 Sanoyas was sold for USD 25 mills to Greek buyers. Moving down the sizes, the Ultramax "Queen Sapphire" - 61K/2011 Iwagi was sold for excess USD 21 mills to Chinese buyers. The Scrubber fitted Supramax "Imperial Eagle" - 56K/2010 IHI changed hands for USD 18 mills, while the one-year older "Sagarjeet" - 58K/2009 Tsuneishi Zhoushan found new owners for low/mid USD 16 mills. Last but not least, the OHBS Handysize "HB Golden Eagle" - 38K/2020 Shimanami was sold for USD 28.5 mills. Finally, the OHBS Handysize "Elegant Emilie" - 33K/2008 Shin Kochi found new owners at USD 12.5 mills.

Wet:

Although the activity on the tanker market remains subdued, with only 2 sales to report, buying appetite is focused on large segments this week. The Scrubber fitted VLCC "Captain X Kyriakou" - 300K/2013 HHI was sold for USD 80 mills to KS-project. Finally, the Ice Class 1B Suezmax "Jag Lalit" - 158K/2005 Hyundai Samho found new owners for USD 33 mills.

Xclusiv Shipbrokers Inc.