The Dry Bulk Weekly Review in Shipfix Data
During the past week, Shipfix’s unique forward-looking data set highlighted that demand for seaborne transportation of copper increased throughout June. The increasing cargo order volumes moved in tandem with rising copper prices. Also, the data signalled changes to the seaborne coal trade. Lower Chinese and Indian requirements have weighed on volumes shipped from the Russian ports in the Baltic Sea. At the same time, freight rates in the Panamax and Capesize segments have benefitted from an increasing European appetite for Australian coal.
Recovering Cargo Order Volumes for Copper Mirrored by Higher Prices
After trending lower since the second half of January, copper prices have staged a recovery during the past seven weeks. The three-month futures listed on the LME have advanced by more than five per cent during the period and are trading around the levels observed at the beginning of the year. The disappointing economic recovery in China contributed to weaker-than-expected demand and weighed on prices. However, renewed optimism that Chinese authorities will do more to support the flagging growth rates amid recent depressed economic data and reports of falling inventory levels at the major exchanges have fuelled the recent rebound.
Cargo order volumes for copper discharging globally have recovered strongly in recent weeks. The total weekly volumes nearly doubled between the end of May and the end of last month. However, after peaking at around 600,000 tonnes, the week before last saw volumes dropping by nearly thirty per cent. Much of the decline was due to lower demand for seaborne transportation of the red metal to China, while volumes for the rest of the world recovered. Still, the recent upward trend for cargo orders for copper supports higher prices. However, should the recent drop in volumes herald a new normal, copper prices could come under renewed pressure.
Apart from a spike at the end of June, amid higher demand for copper to be transported to China, the average cargo sizes have remained relatively stable in the past few months. The typical cargo of seaborne copper has stayed in the range of 15-20,000 tonnes for much of the year, both for shipments to China and the rest of the world.
Falling Demand for Shipments of Russian Coal from The Baltic Sea
Cargo order volumes for Russian coal loading in the Baltic Sea remained under pressure during the past month. The loss of the European market in the wake of sanctions initially saw an increase in shipments to the more distant ports in Asia. However, aggregate monthly order volumes have been trending lower year to date. Last month was no exception, with the total marginally below the reading for May. While demand for seaborne transportation to China recovered somewhat compared to May, the aggregate volumes for June remained well below the readings seen earlier in the year. In contrast, cargo order volumes for coal discharging in India dropped sharply after trending higher since February.
The aggregate monthly cargo orders fell to 1.1 million tonnes in June, 65 per cent lower than during the same month last year. The substantial drop was partly due to the loss of the European market, but lower demand from South America, India and the Middle East also contributed.
Despite the decline in demand for seaborne transportation of Russian coal from the Baltic Sea to China, the average cargo order size for the trade has remained relatively stable. Since the beginning of the year, the typical cargo for the long voyage from the Baltic Sea to China has remained around 60,000 tonnes.
An Increasing Appetite for Seaborne Transportation of Australian Coal to Europe Adds to the Trade’s Tonne-mile Demand
European coal prices have endured another week of headwinds amid falling demand for the dirtiest of fossil fuels as the continent’s coal and natural gas inventories remain well-stocked. In addition, low natural gas prices contribute to the falling use of coal in the continent’s power production. As a result, the front-month futures for delivery in Rotterdam have fallen to the near the lowest levels since May 2021.
Following last year’s introduction of a European import ban on Russian coal, the US rapidly became one of the preferred choices for alternative supplies of the fossil fuel among the continent’s buyers. However, as reported previously by Shipfix, more of the US coal is being shipped to Asia as European imports are declining. The Transatlantic coal trade also shed its recent dominance during June.
At the same time as cargo orders for US coal bound for Europe have retreated, both in absolute and relative terms, volumes for the commodity loading in Australia reached a new high in June. Total spot cargo order volumes for Australian coal heading for European ports topped 1.5 million tonnes for the first time in June, with the shipments due for discharge in the coming months. As a result, Australia has increased its share of the European market. The rising demand for the long-distance transportation has, unsurprisingly, benefited the larger vessel segments, with the Panamaxes seeing the largest increase in demand in the spot market.
For more information on Shipfix and on how to leverage our data for decision-making and market analysis, please contact firstname.lastname@example.org