 |
| L to R: GoodBulk's John Michael Radziwill and Genco's John Wobensmith at the Marine Money Ship Finance Forum. Photo: John Galayda |
Global production gains in iron ore imports bode well for bulkers, but China's coal demand a 'black-box' risk.
China's appetite for iron ore demand may take a hit in November as
the country plans a grand initiative to clean up its air. But dry bulk
executives say any slowdown should not prove a major impact China's
long-term cargo demand.
The China Iron and Steel Association says steel producers in major cities are "about to enter the limited production season on 15 November." The initiative, which covers 28 cities, aims to cut pollution from major industries, such as steel.
The production cut comes after Chinese customs data reported October iron ore imports falling to their lowest level since February 2016. Customs data reported imports of 79.5 million tonnes, down 1.6% from a year ago.
At the Marine Money Ship Finance Forum, Genco Shipping and Trading chief executive John Wobensmith noted the lower iron ore imports last month.
But given increasing production out of Brazil, iron ore cargoes are just moving to other destinations, he added.
"Brasil is up 3% to 4% in October," Wobensmith said. "China's numbers are down which is very typical for this time of year. But that just means ore was going into Europe, which is the only place for it to go."
China continues to shutter older, less efficient steel mills. But Wobensmith says the efforts benefit the dry bulk trade since steel producers will now have to source more of the high quality ore available in Australia and Brazil.
"Everyone was talking about peak steel and that consolidation on the steel mills was a bad thing," Wobensmith said. "But consolidation has been a good thing because it has encouraged seaborne iron ore trade."
GoodBulk chief executive John Michael Radziwill says China's iron ore imports are up 6% this year. He expects those trends to continue due to new production initiatives such as Vale's SD11 project.
The price spread between low and high quality iron ore is roughly double what it was a year ago, which is indicative of continued demand for seaborne imports.
"You've got all these production initiatives by the big miners," Radziwill said. "The good news is that means a lot more long-haul iron ore."
Radziwill says the main risk in China's dry bulk demand is its level of coal imports. Imports can swing between 250 million and 300 million tonnes, out of over 3 billion tonnes consumed annually.
China's import needs can swing widely depending on prices and the country's own policies, presenting a "black-box" risk for shipping.
"China is the swing seaborne importer of coal," Radziwill said. "For them to take 100 million tonnes off the market and source it domestically is nothing."
The China Iron and Steel Association says steel producers in major cities are "about to enter the limited production season on 15 November." The initiative, which covers 28 cities, aims to cut pollution from major industries, such as steel.
The production cut comes after Chinese customs data reported October iron ore imports falling to their lowest level since February 2016. Customs data reported imports of 79.5 million tonnes, down 1.6% from a year ago.
At the Marine Money Ship Finance Forum, Genco Shipping and Trading chief executive John Wobensmith noted the lower iron ore imports last month.
But given increasing production out of Brazil, iron ore cargoes are just moving to other destinations, he added.
"Brasil is up 3% to 4% in October," Wobensmith said. "China's numbers are down which is very typical for this time of year. But that just means ore was going into Europe, which is the only place for it to go."
China continues to shutter older, less efficient steel mills. But Wobensmith says the efforts benefit the dry bulk trade since steel producers will now have to source more of the high quality ore available in Australia and Brazil.
"Everyone was talking about peak steel and that consolidation on the steel mills was a bad thing," Wobensmith said. "But consolidation has been a good thing because it has encouraged seaborne iron ore trade."
GoodBulk chief executive John Michael Radziwill says China's iron ore imports are up 6% this year. He expects those trends to continue due to new production initiatives such as Vale's SD11 project.
The price spread between low and high quality iron ore is roughly double what it was a year ago, which is indicative of continued demand for seaborne imports.
"You've got all these production initiatives by the big miners," Radziwill said. "The good news is that means a lot more long-haul iron ore."
Radziwill says the main risk in China's dry bulk demand is its level of coal imports. Imports can swing between 250 million and 300 million tonnes, out of over 3 billion tonnes consumed annually.
China's import needs can swing widely depending on prices and the country's own policies, presenting a "black-box" risk for shipping.
"China is the swing seaborne importer of coal," Radziwill said. "For them to take 100 million tonnes off the market and source it domestically is nothing."