Chart of the Week Dry Bulk: Coal to China
Increase in the volume of tonnes in the first quarter of the year to a new high, with Russia taking second place among the countries of origin
The third week of March has confirmed that the first quarter is ending with positive momentum for higher rates, as demand growth recovers, especially for the larger ship categories. The supply of ballast vessels in the Capesize segment is now gradually decreasing and demand growth is higher than ever before this year, reaching its final peak at the end of 2022.
In the coal segment, imports to China are now rising to the highest level compared to a similar period in the previous two years (see image above - the 25days moving average), with Russia taking second place among source countries. This firmness in Chinese coal imports suggests that the recent upward trend in freight rates and demand will continue, providing more employment opportunities for prompt vessels.
Meanwhile, the smaller vessel categories will continue to face challenges as tensions between Russia and Ukraine continue to impede the flow of grain and increase congestion at Black Sea ports. However, it has been interesting to read in recent days about the extension of the grain agreement that will allow Ukraine to export millions of tonnes of grain across the Black Sea. It is unclear how long the agreement will last. Ukraine is pushing for 120 days, while Russia is asking for 60 days. Russia has already warned that it will not allow the agreement to be extended unless sanctions against Moscow are eased.
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