Speaker: 00:00:00

We finally did it. After a year of

Speaker: 00:00:03

begging, pleading, bargaining,

Speaker: 00:00:07

we finally got John B. To sit down in the studio with us

Speaker: 00:00:11

and give us a review of the hot commodity markets for

Speaker: 00:00:14

2023 and a view of what he hopes will come

Speaker: 00:00:18

in 2024. We started with Cobo. Now we're doing lithium,

Speaker: 00:00:22

we're doing options, and we're seeing growth market

Speaker: 00:00:25

there, particularly when you look at the price of a battery. So make sure to

Speaker: 00:00:29

stick around. All this and more on freight up. Freight up.

Speaker: 00:00:34

Hello and welcome to freight up. My name is Fernanda, and have we got an

Speaker: 00:00:38

episode for you. It is our last one before we go off on Christmas

Speaker: 00:00:42

break, and we won't see you until the new year. Now, I know you're upset

Speaker: 00:00:45

because this is our last episode before the new year. And

Speaker: 00:00:49

before you start wiping your tears, I'm going to tell you we've got a

Speaker: 00:00:52

great one for you. Not only have we got Johnny B. Himself,

Speaker: 00:00:56

he's going to be giving us a review of some of our major commodities

Speaker: 00:01:00

here at FIS, and also muse a bit about what the year of the

Speaker: 00:01:03

dragon may hold next year. Joshua Stern from our steel

Speaker: 00:01:07

desk and George Houston from Bertz will be offering us a year in

Speaker: 00:01:11

review for their respective desks. Not only that, but a Smith

Speaker: 00:01:15

seven, your favorite broker, will be here to give you his

Speaker: 00:01:18

oil update. So let's dive on in with Archie Smith.

Speaker: 00:01:24

All right. We are in the studio with the one,

Speaker: 00:01:27

the only, a Smith seven, the people's

Speaker: 00:01:31

broker, breaker of chains. Archie, how are you

Speaker: 00:01:35

doing? I'm great, thank you. How are you? Fantastic. I'm very sad that

Speaker: 00:01:39

this is our last episode before Christmas Break. Is it?

Speaker: 00:01:42

Yes. There you go. Now we found out. Yeah. I wasn't

Speaker: 00:01:46

aware you're going to show up next week. I missed the last week, didn't I?

Speaker: 00:01:49

I was in Copenhagen. Yes, we all cried. We were

Speaker: 00:01:53

all very sad, actually. This is your

Speaker: 00:01:57

opportunity to apologize to the fan base. Sorry to everyone, really.

Speaker: 00:02:01

I was representing FIS at our drinks event there, which

Speaker: 00:02:05

was really good. Really good. You know, taking one for the team.

Speaker: 00:02:08

Archie. Someone's got to do it. Yeah. Literally anyone. Okay,

Speaker: 00:02:11

fantastic. Archie, what is going on in the world of

Speaker: 00:02:15

oil? Yes. Crude markets down quite

Speaker: 00:02:19

significantly. I mean, we were touching lows today

Speaker: 00:02:22

of, well, just above $72 per barrel.

Speaker: 00:02:26

72. 20 around there. We were touching OPEC a few weeks

Speaker: 00:02:30

ago, decided they were going to extend the production cuts, the

Speaker: 00:02:33

existing ones, and also add to those as well

Speaker: 00:02:37

with some of the other producing countries. But it's all kind

Speaker: 00:02:41

of backfired at them. I think that there was definitely a lack of

Speaker: 00:02:45

kind of union that has been felt in previous

Speaker: 00:02:49

decisions. OPEC have seemed very unified and very

Speaker: 00:02:52

unanimous when coming to these decisions. I think with the most recent meeting, it seemed

Speaker: 00:02:56

very scattered and that's kind of planted a lot of doubt into the

Speaker: 00:03:00

market. So they feel like they've got some wiggle room. Yeah, wiggle room.

Speaker: 00:03:04

And also I think people are genuinely just thinking that certain

Speaker: 00:03:07

countries are just not going to stick to the abide

Speaker: 00:03:11

by the cuts. So that kind of injection of doubt hao seen crude

Speaker: 00:03:14

prices really come off, even though the official announcement is okay. Yeah, we're cutting

Speaker: 00:03:18

production, which you would imagine in the normal world

Speaker: 00:03:22

supports the prices. Yeah, exactly. I just think that there's a lot of doubt around

Speaker: 00:03:25

these decisions and that's why we're seeing crude come off quite

Speaker: 00:03:29

substantially. We're also getting downward pressures

Speaker: 00:03:33

from non OPEC nations who have really kind of

Speaker: 00:03:36

ramped up production, us being one so kind of

Speaker: 00:03:40

supply surplus almost being floated out there for some

Speaker: 00:03:44

periods of 2024. Nice to know that my gas

Speaker: 00:03:47

prices won't be too high when I get there. Well, yeah, you say that,

Speaker: 00:03:51

but I think it's the gas pump that

Speaker: 00:03:55

always kind of changes last, isn't it? Yeah. When the crude comes

Speaker: 00:03:59

up, I think for the consumer the gasoline prices are

Speaker: 00:04:02

quick to shoot up, but when crude comes off, they're quite slow to

Speaker: 00:04:06

come back down. I'll let you know how it is. Yeah, I

Speaker: 00:04:09

mean, it's much cheaper in the US than it is over here anyway.

Speaker: 00:04:15

I thought the price here was per gallon. Yeah,

Speaker: 00:04:21

it's insane here. Yeah.

Speaker: 00:04:24

Another kind of major factor that's always been lurking in the background is just

Speaker: 00:04:28

kind of general economic outlook still remains pretty

Speaker: 00:04:32

woeful, which again is just adding more downward pressure to prices. I mean,

Speaker: 00:04:35

the EIA actually came out today and lowered their

Speaker: 00:04:39

figure for 2024 oil demand outlook.

Speaker: 00:04:42

So, yeah, again, that kind of saw us come off price wise. I've

Speaker: 00:04:46

got the figures here. They actually lowered it to

Speaker: 00:04:48

102.34 million barrels per day

Speaker: 00:04:52

from 102 spot. 44 million barrels

Speaker: 00:04:56

per day. A small decrease but a decrease nonetheless just kind of stokes

Speaker: 00:05:00

those fires of is the demand going to be there. And what's your take on

Speaker: 00:05:04

it? What's the word on the street? I think word on the street for the

Speaker: 00:05:06

whole kind of year has been poor demand outlook kind of

Speaker: 00:05:10

coming from the other side of it. Something that may

Speaker: 00:05:14

be offering some of a flaw to prices is

Speaker: 00:05:18

a little bit of worry in terms of shipping routes

Speaker: 00:05:21

involving Israel. There was an attack on an oil tanker this

Speaker: 00:05:25

week, which kind of supported prices. I think the name of the group

Speaker: 00:05:29

is Houthi. I think they did claim that

Speaker: 00:05:32

attack. That being said, I know that a Yemen militant

Speaker: 00:05:36

official did come out and say all non israeli bound

Speaker: 00:05:40

ships are safe, but any israeli bound

Speaker: 00:05:44

oil tankers are a target I think is kind of pretty much what he

Speaker: 00:05:47

said. So yeah, the war tension is kind of coming back into it again. It's

Speaker: 00:05:51

not significant enough to really kind of boost prices, but

Speaker: 00:05:55

I think there is an argument for it offering some flaw at the minute.

Speaker: 00:05:58

Obviously we are still coming off, but there's definitely enough

Speaker: 00:06:02

worry of physical oil tankers being attacked in that region. In terms of support

Speaker: 00:06:06

side, I'd say that's one of the only points at the minute. Everything else is

Speaker: 00:06:09

kind of going the other direction and I think that pretty much rounds me up

Speaker: 00:06:12

on the crude. Overall fuel market

Speaker: 00:06:16

is definitely settling, looking

Speaker: 00:06:19

kind of specifically at the sing .5 marine fuel. Obviously

Speaker: 00:06:23

we saw ridiculous strength in that a few weeks

Speaker: 00:06:27

ago and that was in light of the Azore refinery being offline in

Speaker: 00:06:31

Q eight, which is a massive, massive producer of the very low sulfur

Speaker: 00:06:34

marine fuel oil. We saw cracks getting to record high

Speaker: 00:06:38

levels, front spreads getting to record high levels. That was last month.

Speaker: 00:06:42

And kind of since then it has just been gradually settling and

Speaker: 00:06:46

softening. I mean the cracks off about a dollar on the week,

Speaker: 00:06:49

6.5 front cracks trading around $10 per barrel. That was about eleven

Speaker: 00:06:53

thereabouts last week. And same with that front. Jan

Speaker: 00:06:57

Feb spread is off about $2 on the week. Just

Speaker: 00:07:00

trading sub five levels as I left my desk.

Speaker: 00:07:05

So yeah, really kind of see softening in that market and that's just

Speaker: 00:07:09

off the back of higher supplier expected in

Speaker: 00:07:12

Asia arbitrage and also Alzheimer refinery coming

Speaker: 00:07:16

back online. I think it's set to be fully operational at the turn of the

Speaker: 00:07:20

new year. I think it's the third and final spec up that they're getting

Speaker: 00:07:24

back online. The other two are operating and obviously

Speaker: 00:07:27

that's just injecting a lot more supply into the asian market and

Speaker: 00:07:31

hence why we've seen softening in the front there.

Speaker: 00:07:35

It's the most important question is, Archie, what are you doing for the

Speaker: 00:07:38

holidays? I'm just at home. Me mum,

Speaker: 00:07:42

dad, the dogs and potentially nan and granddad.

Speaker: 00:07:45

Biggest fans afraid up all under one roof. Exactly.

Speaker: 00:07:50

Are you a household that gets your dogs presents 100%?

Speaker: 00:07:54

Yeah. Oh my God, that's so cute. When did you get them? This year. They're

Speaker: 00:07:56

not listening. Well yeah, I've not bought for my dogs this year. But last year

Speaker: 00:08:00

I got them a barber coat each

Speaker: 00:08:03

year and some

Speaker: 00:08:07

barber dog shampoo and dog conditioner. Oh,

Speaker: 00:08:11

my God. Well, now, you know, folks, Archie's dogs are living

Speaker: 00:08:14

better than you. Yeah, spoil them. Yeah. It was an absolute

Speaker: 00:08:18

pleasure to have you here today. And we'll see you in

Speaker: 00:08:22

2024. Yes. Happy new year to everyone. Merry Christmas and see you

Speaker: 00:08:25

2024. Now, we couldn't

Speaker: 00:08:29

say goodbye to 2023 without giving you a very

Speaker: 00:08:33

special present. And that present is the

Speaker: 00:08:36

musings of FIS, John

Speaker: 00:08:39

B. All right. We are in the studio in

Speaker: 00:08:43

London and there was just thunder and lightning outside, which

Speaker: 00:08:47

can only mean one thing. John B. Is here.

Speaker: 00:08:50

How are you, John? Very well, thank you. It's great to have

Speaker: 00:08:54

you. Good to be back. Took a year, but we got you in

Speaker: 00:08:57

here. So it's been a bit of a volatile year.

Speaker: 00:09:01

And for you it seems to be that either

Speaker: 00:09:05

Burnley is going to have a stable year or the markets are going

Speaker: 00:09:09

to have a stable year. Which one happened this year for you? Well, unfortunately,

Speaker: 00:09:12

Burnley. If you look at the league table, we were pretty much at the bottom.

Speaker: 00:09:16

But the season's not over. I think we play

Speaker: 00:09:20

Everton on Saturday. So we've got to get a win. The business is what

Speaker: 00:09:24

we do. The commodity business. Yes, it's been a very volatile

Speaker: 00:09:27

year. We have lots of markets and you're going to give us a breakdown

Speaker: 00:09:31

of each one? Well, the first thing is we probably haven't

Speaker: 00:09:34

seen this volatility since probably the spring of

Speaker: 00:09:38

2020 when we were starting around sort of COVID

Speaker: 00:09:42

time. And prior to that we had this massive move in the

Speaker: 00:09:45

markets in 2008 with a financial crash and also the shipping

Speaker: 00:09:49

crash and the iron ore crash. Been a difficult year, to be honest, for everyone,

Speaker: 00:09:53

particularly the traders, because it's been all over the place. So I just wanted to

Speaker: 00:09:57

just highlight some of the key markets, which fis do.

Speaker: 00:10:00

So obviously on the freight, the dry freight. I came up

Speaker: 00:10:04

with something the other week called Cape Miss

Speaker: 00:10:07

because it was an early Christmas present for the Cape owners when the

Speaker: 00:10:11

market rallied from sort of 20,000 to sort of over 50,000.

Speaker: 00:10:15

You can never predict anything in freight because there's always something which

Speaker: 00:10:19

people haven't predicted. So there was a big shortage of

Speaker: 00:10:23

ships in the Atlantic. There was a lot of destocking and

Speaker: 00:10:27

yeah, it went up. And then the December contract in

Speaker: 00:10:30

Capes were 41,000, then dropped to 29,000.

Speaker: 00:10:34

And it's now at 35. So it's not quite Cape crash,

Speaker: 00:10:37

but obviously it's been and interesting. It caught market

Speaker: 00:10:41

by surprise. So just when we're talking about freight, we've

Speaker: 00:10:45

had increasing volumes this year on the dry

Speaker: 00:10:48

FFA and I think we're up 38%. So well

Speaker: 00:10:52

done. Increasingly important part of the industry for

Speaker: 00:10:56

shipping and we've seen more financial players coming in with

Speaker: 00:10:59

a different view. Some people think, is that good for liquidity or bad for

Speaker: 00:11:03

liquidity? And overall most people have been streaming for liquidity and

Speaker: 00:11:07

it's good for liquidity, I think, and it's moving the markets,

Speaker: 00:11:11

particularly if a ship owners got a view, maybe their fund has a different view.

Speaker: 00:11:15

So it's good to have a two way market then

Speaker: 00:11:19

moving on from freight. Iron

Speaker: 00:11:22

ore, obviously iron ore has also been

Speaker: 00:11:26

really volatile. So we've seen iron ore, CNF

Speaker: 00:11:30

China, the imported price in China go

Speaker: 00:11:32

from

Speaker: 00:11:35

definitely booked the trend because no one expected

Speaker: 00:11:39

the iron ore to go to $137 because there was lots

Speaker: 00:11:43

of production, there was really negative news coming out of China. We had the

Speaker: 00:11:47

property market, which is about 30% of the GDP,

Speaker: 00:11:51

on its back. We've seen this stimulus come in, we've seen a

Speaker: 00:11:55

ramp up in the numbers and once again the iron ore has

Speaker: 00:11:58

rallied and caught the market by a surprise.

Speaker: 00:12:02

And then the other sort of products we do

Speaker: 00:12:06

steel and scrap. We've seen healthy volume growth in the

Speaker: 00:12:09

steel and scrap market, particularly in the US and also in the european

Speaker: 00:12:13

market. We've seen the prices moving around

Speaker: 00:12:17

some days, $5000 a day. And slowly,

Speaker: 00:12:20

slowly the industry in steel, which has been

Speaker: 00:12:23

the second biggest commodity after oil, is waking up to the fact we

Speaker: 00:12:27

want to hedge, we want to trade risk management products.

Speaker: 00:12:31

So we've seen lots of consolidation in the US

Speaker: 00:12:34

with some three big steel companies who don't trade derivatives.

Speaker: 00:12:38

But we hope that they might do in the future when they see these kind

Speaker: 00:12:41

of price swings and more of these young people going into

Speaker: 00:12:45

these industries and know coke and coal, iron ore,

Speaker: 00:12:48

steel, you've got to manage risk. So hopefully that conservative

Speaker: 00:12:52

industry is going to move more into these markets like the power

Speaker: 00:12:56

and the energy markets we've seen over the last 1020 years. Then we move on

Speaker: 00:12:59

to oil. Oil, wow, oil.

Speaker: 00:13:03

So it's been very political this year,

Speaker: 00:13:07

particularly who's bigger, us or China? Do we

Speaker: 00:13:10

price global trade in dollars or in RMB? So there's been that

Speaker: 00:13:14

sort of struggle. We've had a lot of politics, obviously

Speaker: 00:13:18

there's still the Ukraine war, which fis, very sad, which I'll talk about

Speaker: 00:13:21

shortly. We've had obviously the Middle east crisis and we've got the

Speaker: 00:13:25

big powers there and it's adding to that

Speaker: 00:13:28

volatility. And then, obviously, the US has ramped up its production

Speaker: 00:13:32

to starve all that volatility off. And it's also

Speaker: 00:13:36

been really difficult to trade. And

Speaker: 00:13:39

we certainly at FIS, we're seeing a lot more ship owners

Speaker: 00:13:43

coming to us, asking how we can hedge those

Speaker: 00:13:47

volatile prices, because in some cases, it's 30% to 40%

Speaker: 00:13:51

of the delivered cost of freight. That's kind of working. Some other

Speaker: 00:13:55

interesting markets, which we have pioneered and innovated, obviously,

Speaker: 00:13:58

people think, well, we just sit there, but we do a lot of good

Speaker: 00:14:02

work in the market by looking, what does the industry want, what

Speaker: 00:14:06

type of products need to be developed? And we were the first company to start

Speaker: 00:14:09

on battery metals. So, interestingly, battery

Speaker: 00:14:13

metals is a growing market. So if you look at the new car

Speaker: 00:14:17

production this year, 30% of new cars in

Speaker: 00:14:20

China are electric,

Speaker: 00:14:23

23% are in Europe

Speaker: 00:14:26

electric cars. And where you're from, the gas guzzlers of the

Speaker: 00:14:30

US, who are kind of anti green,

Speaker: 00:14:33

we've got 7%. So slowly, slowly, the US,

Speaker: 00:14:37

we're getting there. Getting there. But then, yeah, so we started

Speaker: 00:14:40

with cobalt. Now we're doing lithium, we're doing options, and

Speaker: 00:14:44

we're seeing a growth market there, particularly when you look at the price

Speaker: 00:14:48

of a battery. If you take cobalt, lithium and nickel, we came up smith. This

Speaker: 00:14:52

idea called the virtual battery. So you can buy the actual ingredients of

Speaker: 00:14:56

the battery, because in some cases, it's 30% to 40% of the cost of a

Speaker: 00:14:59

battery is the actual raw materials, and it's about 20, 30% of the cost

Speaker: 00:15:03

of a car. So it's a very important part of a car. And

Speaker: 00:15:07

particularly when nickel prices went through the roof, the battery prices all

Speaker: 00:15:11

went up. So it's a good time to be friends with Anna Chadwick. That's

Speaker: 00:15:14

right. And obviously, we're seeing companies coming into

Speaker: 00:15:18

this space, particularly some of the financial players and the funds,

Speaker: 00:15:22

who actually don't produce cars. But they think it's a good story for their

Speaker: 00:15:26

investors because it's know, it's green.

Speaker: 00:15:30

It's a green story. So we're getting more non

Speaker: 00:15:33

car production companies involved in that, because it's a good story for. It's a

Speaker: 00:15:37

good ESG move. Yeah. The nice thing is, because cobalt,

Speaker: 00:15:41

most of it's producing the DCR, you can't really trade the physical

Speaker: 00:15:45

cobalt, because you've got two big traders who own most of the production. So

Speaker: 00:15:48

having a paper instrument, there's no risk of defaults

Speaker: 00:15:52

or companies not supplying the stuff. When you can trade the index

Speaker: 00:15:57

and then going through the other stuff, what we do, the

Speaker: 00:16:00

fertilizers, has not been as volatile this year. We've seen

Speaker: 00:16:03

China one month say we're not going to export fertilizers, and then all of

Speaker: 00:16:07

a sudden it goes up. And then for the indian tender the other month, they

Speaker: 00:16:11

provided 30% of the import. So that's been

Speaker: 00:16:14

volatile. It's a lower prices today, around $300,

Speaker: 00:16:18

but it's a very important part of the cost of grain, which is around

Speaker: 00:16:21

20%. And then emissions,

Speaker: 00:16:25

obviously my favorite, because it took me a year to understand what it

Speaker: 00:16:29

was. And a lot of trading. Yeah, a lot of

Speaker: 00:16:32

groans and, you know, it is a complicated market because you've got

Speaker: 00:16:36

what we've got the compliance market, which is the EUAs in Europe, and then

Speaker: 00:16:40

we've got the voluntary market, which is kind of global. You've

Speaker: 00:16:44

got lots of different products out there which have all different

Speaker: 00:16:47

points. But the fact is there has been a little bit of reduction in Europe

Speaker: 00:16:51

in terms of global emissions and there's been more of a switch

Speaker: 00:16:55

into renewables. But you've seen people who are long the

Speaker: 00:16:58

Euas to go short. So we've had volatility there

Speaker: 00:17:02

from

Speaker: 00:17:07

shipping company has to wake up to this kind of price swing, because they're going

Speaker: 00:17:10

to have to get involved in it. And we've been pushing the consultancy side

Speaker: 00:17:14

and trying to help people understand how to trade it and be green and make

Speaker: 00:17:18

money. And we're there to help you for next year when it

Speaker: 00:17:21

actually starts. And you have to register what you have to do

Speaker: 00:17:26

in closing. It's been a very interesting year.

Speaker: 00:17:30

Next year is year of the dragon. That's the wood

Speaker: 00:17:33

dragon, apparently.

Speaker: 00:17:36

A dragon fis. Very intellectual. Takes advantage of

Speaker: 00:17:40

things at any chance, and it's good fortune. The tiger, which

Speaker: 00:17:44

I was born, is the Risk taker. So I get gobbled up by the dragon.

Speaker: 00:17:47

We had a very good event the other week in Shanghai.

Speaker: 00:17:51

I haven't been there for a number of years. It was great to see

Speaker: 00:17:55

everybody. You cannot ignore China. China is still 40

Speaker: 00:17:58

45% of the world's commodities and we want to keep investor

Speaker: 00:18:02

in China. We've been there for 15 years and we appreciate their support

Speaker: 00:18:06

from the chinese companies we deal with. And

Speaker: 00:18:09

then, very sad situation in the world's

Speaker: 00:18:13

politics today with Israel and Palestine. But

Speaker: 00:18:16

obviously, something close to our heart has been Ukraine. And

Speaker: 00:18:20

having been on the front line and seen face to face, I speak pretty

Speaker: 00:18:24

much every day to people in Ukraine, and it's really

Speaker: 00:18:27

a bad situation. We've delivered the armored ambulances we've

Speaker: 00:18:31

delivered humanitarian aid. We're also providing flour and

Speaker: 00:18:35

bread to build a small bakery down in Hassan. The Victory

Speaker: 00:18:39

Bakery. The Victory Bakery, yeah. So I would stress,

Speaker: 00:18:42

and the fact is, it's our charity, which is direct. We're not going through

Speaker: 00:18:46

other big charities which take 20, 30%. We can show you what we

Speaker: 00:18:50

do. So anybody on listening to this, if you can help us, it's

Speaker: 00:18:53

www.ukrainecares.com. And I can assure you,

Speaker: 00:18:57

you'll make somebody a happy Christmas. It's not a happy Christmas down there right now.

Speaker: 00:19:00

And we're all sitting having our mince pies and having a beer. But think of

Speaker: 00:19:04

other people who are having a very hard time.

Speaker: 00:19:08

We also helped up in Burnley, the cancer. You

Speaker: 00:19:11

donated quite an innovative machine. We donated

Speaker: 00:19:15

probably the second biggest donation in East Lancashire. And

Speaker: 00:19:19

the idea was to try and catch cancer early. So we're able to

Speaker: 00:19:23

buy a machine which can actually spot the cancer and actually can do the operation.

Speaker: 00:19:27

So it's really frightening to go to these things anyway. And then finally you've

Speaker: 00:19:31

got a cancer, a lump, and then you can get operated on there and

Speaker: 00:19:34

then. So it's absolutely amazing. So I just wanted to thank the customers

Speaker: 00:19:38

of FIS and all the people we know for your support this

Speaker: 00:19:42

year, and hopefully we'll continue this good fortune as

Speaker: 00:19:45

the year of the dragon says. And I hope 24 will be good. Have a

Speaker: 00:19:49

great Christmas, keep safe and well, and thank

Speaker: 00:19:52

you again. Now it's been

Speaker: 00:19:56

a minute. I know you've missed him. So here's Joshua Stern with a stern

Speaker: 00:20:00

update. Yeah, thanks for the introduction, Fernanda. It has been some

Speaker: 00:20:04

pretty crazy times in the steel markets over the past couple of weeks, in

Speaker: 00:20:07

particular on both the scrap and the USHRC side. On the

Speaker: 00:20:11

USHRC side, we've seen the mills really come in and raise

Speaker: 00:20:14

offers pretty much up to about 1100 area right now.

Speaker: 00:20:18

That's kind of where we're trading. Cru came out at about 1044

Speaker: 00:20:22

this week. Platts is actually putting us Midwest

Speaker: 00:20:25

HRC physical trades obviously out there already at

Speaker: 00:20:28

1100. So, yeah, it seems like there's a little bit more move to the

Speaker: 00:20:32

upside still, but momentum has definitely kind of fallen off

Speaker: 00:20:36

over the last couple of days. We had a huge rally, essentially from about

Speaker: 00:20:39

800 all the way up to about 1100. If you're looking

Speaker: 00:20:43

at like the Jan futures right now, they're just trading a tad above 1100.

Speaker: 00:20:46

So the curve has gotten pretty out of whack and, yeah, very, very

Speaker: 00:20:50

high prices right now heading into the new year. I do suspect that we kind

Speaker: 00:20:54

of start to see some of these prices come off in a little bit of

Speaker: 00:20:57

a fashion. Momentum has really slowed down, although we

Speaker: 00:21:00

have kind of seen like for the Jan contract in USHRC, this

Speaker: 00:21:04

1100 point has very much been a kind of a support level.

Speaker: 00:21:08

We have had a couple of trades go just a tad under, but it pretty

Speaker: 00:21:11

much catches support again just around there at 1100. So going

Speaker: 00:21:15

forward, I think for the USHRC curve, it's really, really important to go ahead

Speaker: 00:21:18

and kind of monitor prices. How much longer can we actually stay

Speaker: 00:21:22

above basically four handles? We're already starting to see things like Q

Speaker: 00:21:26

224 already down there at about 929 25.

Speaker: 00:21:30

Things are coming off on kind of the back end of the curve, whereas

Speaker: 00:21:33

in the front three months of, I would say 2024, you're still

Speaker: 00:21:37

seeing quite a bit of strength. So Q one is where most of the strength

Speaker: 00:21:40

is. I am a bit wary. Again, basis, the momentum of the

Speaker: 00:21:44

rally has really fallen off and just high price levels, especially

Speaker: 00:21:48

as you're going into the kind of Christmas period or holiday

Speaker: 00:21:51

period, you're going to see a lot of people, especially kind of out in the

Speaker: 00:21:54

USHRC markets where people have to get rid of quotas, right, just

Speaker: 00:21:58

like you and me. Everybody wants a happy Christmas. Everyone wants to hit their quota,

Speaker: 00:22:02

right? So steel sales, know these sales guys still have

Speaker: 00:22:05

steel that they need to get off before the end of the year. Hence I

Speaker: 00:22:09

do think that there could be a bit of pressure over the next few know,

Speaker: 00:22:12

kind of as liquidity also dies out going into the holiday period. So

Speaker: 00:22:16

that's where we are on the USHRC side of

Speaker: 00:22:20

know moving over to scrap. Scrap and

Speaker: 00:22:23

know rebar. Let me start with that one because it's just not really, I

Speaker: 00:22:27

feel like it never gets talked about enough. And what you're kind of starting to

Speaker: 00:22:31

see right now is the spread between rebar and scrap. Obviously,

Speaker: 00:22:35

this is what we call the arc spread here. This is essentially kind of telling

Speaker: 00:22:38

you how profitable are those turkish mills. And what

Speaker: 00:22:42

we're seeing is that these spreads are basically at super low. I

Speaker: 00:22:45

mean, it almost never goes sub 200 and we're looking at

Speaker: 00:22:49

about 180 right now on that spread on a spot basis.

Speaker: 00:22:53

So what you're kind of also seeing here is that rebar and scrap

Speaker: 00:22:56

prices very much moving in tandem, both absolutely

Speaker: 00:23:00

skyrocketing. I think we've gained probably $30, maybe

Speaker: 00:23:03

even $35 over the last two weeks on the scrap side of

Speaker: 00:23:07

things. And rebar was trading just at about 600. We're now about 626

Speaker: 00:23:11

25 as well, there. So things are really kind of getting

Speaker: 00:23:15

tight there. As I say there, we're getting kind of tight. I think this is

Speaker: 00:23:18

also very much a function of what's actually going on. First off, right now, I

Speaker: 00:23:22

mean, there's extreme shortages of vessels available. Freight rates

Speaker: 00:23:26

have shot up out the roof. So in turn, you're starting to see that

Speaker: 00:23:29

actually take place in the curves as well, especially in scrap and rebar.

Speaker: 00:23:33

So, like scrap, for instance, you've really started to see basically the

Speaker: 00:23:37

entire curve come up. And something that we've kind of found. Interesting over the last

Speaker: 00:23:40

few weeks is the curve has essentially flattened out in the front

Speaker: 00:23:44

months, and you're almost kind of back into a backwardation.

Speaker: 00:23:47

Although this backwardation might be available on screen,

Speaker: 00:23:51

there are kind of some interesting nuances that we've experienced over the

Speaker: 00:23:55

last few weeks, and we had some interest essentially in kind of further

Speaker: 00:23:58

down 2024. So about Q three Q

Speaker: 00:24:01

424. And in the scrap market, what

Speaker: 00:24:05

people were physical guys were coming in and they were offering this

Speaker: 00:24:08

significantly higher than it was on screen. And you would kind of have

Speaker: 00:24:12

some of the financial players come in and offer it a bit lower. But it

Speaker: 00:24:15

really surprised me, actually, that offers were coming in so high

Speaker: 00:24:19

from the fizz side. And the reason for that is, well, a, they have a

Speaker: 00:24:22

cost of carry, right? So that cost of carry, essentially, in

Speaker: 00:24:26

the back end of that scrap curve, especially with interest rates so high,

Speaker: 00:24:31

was quite a cost for these guys to actually go ahead and have on

Speaker: 00:24:34

their books going forward. So didn't really see a lot of

Speaker: 00:24:38

physical interest there, a lot of financial interest that was kind of looking at that

Speaker: 00:24:41

part of the curve. And front end of the curve is pretty much flat back

Speaker: 00:24:45

end of the curve, although prices might be a little bit depressed there.

Speaker: 00:24:49

I do think if you were in the derivative market, it might actually be a

Speaker: 00:24:53

bit tougher to get those prices and offers might come in a bit higher.

Speaker: 00:24:56

So if you're a bidder, you're very likely to have to almost kind of quote

Speaker: 00:25:00

unquote, overpay, in my opinion. So that's just kind of what I'm

Speaker: 00:25:04

seeing. Know, it very much feels like a little bit of a squeeze as well

Speaker: 00:25:07

going on out there in Turkey on the ground, right? I mean, you've got these

Speaker: 00:25:11

rebar mills and they need scrap. There's not a ton of scrap out in the

Speaker: 00:25:15

market at the moment, so they're having to pay up. And scrap guys

Speaker: 00:25:18

are, everyone's of the same opinion. With freight rates going higher, with

Speaker: 00:25:22

interest rates so high, et cetera. It costs so much

Speaker: 00:25:26

more going to head and actually trading the physical. So

Speaker: 00:25:30

in turn, yeah, scrap, I would say, very

Speaker: 00:25:33

strong right now. In general, the whole kind of turkish sector seems pretty

Speaker: 00:25:37

strong. Everything is rising there. Going forward into

Speaker: 00:25:40

2024. I've heard quite a few positive things about the rebar market as

Speaker: 00:25:44

well. Lots of people are expecting that there's going to be quite a bit of

Speaker: 00:25:47

demand and quite a bit of a price hike going into 2024. So

Speaker: 00:25:51

some things to look out for and, yeah, to keep your eye on.

Speaker: 00:25:55

I did just want to take a moment as well and kind of talk about

Speaker: 00:25:58

some of the physical stuff that we've seen on scrap as well. Over the past

Speaker: 00:26:01

couple of weeks, there has been a flurry of

Speaker: 00:26:05

activity. Right. A couple of weeks ago we were seeing deals down

Speaker: 00:26:09

in the low 400s, possibly even in the high

Speaker: 00:26:12

300s, but like, for instance, just yesterday we saw a deal

Speaker: 00:26:16

go through for 80 20 hms at 428.

Speaker: 00:26:20

So, I mean, again, prices are really getting elevated

Speaker: 00:26:24

here. Again, very strongly correlated to the heightened

Speaker: 00:26:27

prices in shipping and just the general

Speaker: 00:26:31

availability of vessels. So I think that leads

Speaker: 00:26:34

us very well into kind of our FFA's desk and the freight desk here, who

Speaker: 00:26:38

can then actually provide a little bit more insight into what's actually causing

Speaker: 00:26:42

these disruptions in the supply chain.

Speaker: 00:26:46

Let's talk freight as pessimism set in in the beginning of the

Speaker: 00:26:50

week. Last week, we saw aggressive selloffs in the Cape

Speaker: 00:26:54

market throughout the week, coupled with less support from slower fixing activity

Speaker: 00:26:58

in both basins. Panamax soon followed suit, marking a

Speaker: 00:27:02

17% decrease in a week, despite the fundamental market

Speaker: 00:27:05

remaining largely stable. The main supporting factors to watch out

Speaker: 00:27:09

for were congestion in mainland China and further potential stimulus

Speaker: 00:27:13

from Beijing, boosting the iron ore market. Drilling into the capes, we

Speaker: 00:27:16

witness a more than 30% drop in time charter

Speaker: 00:27:20

rates. This decline was attributed to reduced activity in both

Speaker: 00:27:23

basins, coupled with aggressive selloffs in ffas. In the

Speaker: 00:27:27

Pacific, only one iron ore major was seeking cargo for most of the week,

Speaker: 00:27:31

leading to an increased tonnage list. Conversely, cargo volumes from

Speaker: 00:27:35

Brazil and South Africa declined, widening the gap between bid

Speaker: 00:27:39

and offer and further pressuring Atlantic rates. However,

Speaker: 00:27:42

adverse weather conditions in north China resulted in more port

Speaker: 00:27:45

closures, slightly boosting Pacific rates from the end of last

Speaker: 00:27:49

week. On a weekly basis, Cape iron ore shipments fell by

Speaker: 00:27:52

10% to 29 million tons due to a sharp volume

Speaker: 00:27:56

decline from Brazil. Coal volumes remained steady at a high level of

Speaker: 00:27:59

7.4 million tons, supported by consistent robust

Speaker: 00:28:03

demand. However, minor bulk volumes experienced a significant weekly

Speaker: 00:28:07

drop of 17%, reaching 2.8 million tons.

Speaker: 00:28:11

The Cape rate started to rally at the beginning of the new week, driven by

Speaker: 00:28:14

potential increases in iron ore demand from China,

Speaker: 00:28:17

anticipated government stimulus and ongoing weather disruptions.

Speaker: 00:28:21

It's likely that rates will firm up to some extent this week.

Speaker: 00:28:25

In terms of fixture, the key c five iron ore route West Australia to

Speaker: 00:28:29

China was initially fixed at $13.90 for 16 December onward,

Speaker: 00:28:33

but fell to $10.40 for 23 to 25 December

Speaker: 00:28:36

by the end of the week. Last Tuesday was a day for the bears as

Speaker: 00:28:40

December sold down to a low of 31 500

Speaker: 00:28:43

-500 from closing levels and -9000

Speaker: 00:28:47

from yesterday's highs and January sold down to 14,000,

Speaker: 00:28:51

which is -3000 there was some respite in the evening session

Speaker: 00:28:55

with December retracing to 32 750

Speaker: 00:28:58

and Jan to 15,750.

Speaker: 00:29:02

Conversely, this week started off a bit hot with December getting paid in quick

Speaker: 00:29:05

succession 33,033

Speaker: 00:29:08

534,000. January traded up to

Speaker: 00:29:11

17,250 and q one to

Speaker: 00:29:14

13,500. Sellers took over in the afternoon, with January

Speaker: 00:29:18

pushed down to 16,000, minus 1250 from the

Speaker: 00:29:22

highs. Moving on to Panamax as we alluded to in

Speaker: 00:29:25

the beginning, despite the fundamentals remaining consistently stable,

Speaker: 00:29:29

Panamax had a highly volatile week and came under pressure from

Speaker: 00:29:33

a bearish Cape market. In the asian market, strong coal demand persisted

Speaker: 00:29:36

from China, Japan and India, resulting in high shipments reported from

Speaker: 00:29:40

Indonesia and Australia. Additionally, market sources reported an

Speaker: 00:29:44

increasing number of vessels waiting around North China due to weather

Speaker: 00:29:47

disruptions. Nevertheless, the negative tone in ffas took

Speaker: 00:29:50

charge, leading to slower fixing activity and a standoff between

Speaker: 00:29:54

owners and charterers. Initial buying last Monday saw December

Speaker: 00:29:58

print up to 21 500 and q one up to

Speaker: 00:30:02

15,250 before stalling and running into

Speaker: 00:30:05

resistance. This resistance turned into pressure as the day progressed

Speaker: 00:30:09

and December traded down to 19,250,

Speaker: 00:30:12

Jan to 14,600 and q one to

Speaker: 00:30:15

13,250. A gloomy day on Tuesday

Speaker: 00:30:19

followed for Panamax papers. December and January traded down to

Speaker: 00:30:23

17,000 512,500

Speaker: 00:30:26

respectively, while Q slipped down to

Speaker: 00:30:28

11,750. Post index saw the curve

Speaker: 00:30:32

correct itself, with December pushing north of 18,000, January

Speaker: 00:30:36

to 13,250 and q one up to

Speaker: 00:30:39

12,650. Fast forward to this week and the market

Speaker: 00:30:43

is starting to slow down with Christmas just around the corner. Q one was

Speaker: 00:30:47

hovering up about 12,400 to 12,500

Speaker: 00:30:51

and January was being paid at 13,250.

Speaker: 00:30:55

More interest was seen further out, with Cal 24 reaching

Speaker: 00:30:58

12,900 and Cal 25 paid at

Speaker: 00:31:01

11,900. The afternoon saw sellers return, with the

Speaker: 00:31:05

market dipping $300 from the day's highs before stalling at

Speaker: 00:31:09

a close. Finally, for all you Supermax

Speaker: 00:31:12

fans, we've been waiting for this moment. Last week we

Speaker: 00:31:16

saw some early rallying on Monday, which was quickly

Speaker: 00:31:20

overturned in the afternoon as December and January traded up to

Speaker: 00:31:23

19,000 517,500

Speaker: 00:31:27

respectively, before trading down over

Speaker: 00:31:29

$2,000. Tuesday opened on a softer note, with the

Speaker: 00:31:33

entire curve mostly offered. Jan and Q one traded down

Speaker: 00:31:37

to 12,750 and 11,650,

Speaker: 00:31:40

respectively. Further out, cal 24 and Cal 25 traded

Speaker: 00:31:44

down to 11,850 and 11,100,

Speaker: 00:31:48

respectively. This week we started off with January trading up to

Speaker: 00:31:51

13,700 on the prompt. A lack of liquidity saw sellers

Speaker: 00:31:55

offering into avoid, leading to the entire curve coming off throughout

Speaker: 00:31:59

the day. Finally, the FFA market this week

Speaker: 00:32:03

saw another week of heavy volume in the FFA's market preceding the

Speaker: 00:32:06

holiday season, with the total trading volume reaching nearly

Speaker: 00:32:10

108,000 lots last week. Among vessel sizes,

Speaker: 00:32:14

Panamax futures saw the largest volume traded, averaging

Speaker: 00:32:17

6725 lots changing hands per day.

Speaker: 00:32:21

Cape followed closely with about 5230 lots

Speaker: 00:32:24

traded daily, and Supermax also experienced higher volumes,

Speaker: 00:32:28

averaging 3070 lots traded daily. Options

Speaker: 00:32:32

trading remained active with 2580 lots cleared in

Speaker: 00:32:36

Cape and 13,850 lots in

Speaker: 00:32:39

Panamax. In terms of contract periods, the primary focus of the

Speaker: 00:32:43

interest was on December January Q one, Q two and

Speaker: 00:32:46

Cal 24 to 25 contracts, so pretty much all of

Speaker: 00:32:50

them open. Interest increased slightly as positions extended to

Speaker: 00:32:54

further dated contracts. As of 11th December, Cape five

Speaker: 00:32:57

TC open interest reached

Speaker: 00:32:59

170,520 lots,

Speaker: 00:33:02

Panamax four tc,

Speaker: 00:33:04

180,466 lots, and

Speaker: 00:33:08

Subramax ten tc

Speaker: 00:33:10

88,176 lots.

Speaker: 00:33:13

Finally, in regards to voyage routes, last week we saw

Speaker: 00:33:16

2.225 million tons of c five and

Speaker: 00:33:20

39.5 kilotons of c three were cleared, with the

Speaker: 00:33:23

main interest focusing on December on deck and Q

Speaker: 00:33:27

one contracts along with smaller sizes on Jan.

Speaker: 00:33:31

24. That is your freight update. We will see you

Speaker: 00:33:34

in the new year.

Speaker: 00:33:38

And now for a voice that you've never heard before, George

Speaker: 00:33:42

Fertilizer Houston is here to give you his update.

Speaker: 00:33:45

All right, George, so it has been one heck

Speaker: 00:33:49

of a year for the fertilizer desk, which is why I'm

Speaker: 00:33:53

assuming you're making your braid up debut podcast.

Speaker: 00:33:57

Welcome to the show. Yeah, well, thank you for having me.

Speaker: 00:34:00

Tell us a bit about some of the big news you have to share with

Speaker: 00:34:04

us. So the big news is me and the fertilizer team

Speaker: 00:34:08

brokered the first NoLA DAP option last week, which would

Speaker: 00:34:12

be the first phosphate options traded in the fertilizer

Speaker: 00:34:15

market. And it was a 550 March NoLA

Speaker: 00:34:19

DaP put option at $11. Amazing. And

Speaker: 00:34:23

what does this really say about the market right now? I think it shows

Speaker: 00:34:26

that the options market is continuing to develop and

Speaker: 00:34:30

mature and grow, and we're hoping that

Speaker: 00:34:33

this DAP option is the first of many of DAP

Speaker: 00:34:37

options to come, and we'll continue to kind of push the momentum that we

Speaker: 00:34:41

already have in the options market and fertilizer.

Speaker: 00:34:44

That makes sense because this isn't the first big milestone

Speaker: 00:34:48

we've had this year. Can you tell us a bit more about some of the

Speaker: 00:34:52

other achievements that FIS has had over the year? To kind of go over

Speaker: 00:34:55

our recent achievements in the options markets going

Speaker: 00:34:59

back to October of 2022, we brokered the first

Speaker: 00:35:02

fertilizer option, which was a Noli urea option.

Speaker: 00:35:06

And then in July of 2023, we

Speaker: 00:35:10

brokered the first option in the international market, which

Speaker: 00:35:14

was a brazilian urea option. And in a grand total,

Speaker: 00:35:17

we brokered over 100,000 tons worth of options so far.

Speaker: 00:35:21

That's amazing. So how does liquidity look in the

Speaker: 00:35:25

market for this year? It seems to be growing steadily. We've

Speaker: 00:35:28

seen more and more options getting traded, and new players keep coming

Speaker: 00:35:32

into the market, and we are hoping another wave of

Speaker: 00:35:36

liquidity will be coming after hearing that CME is planning on listing

Speaker: 00:35:39

Nola urea options in quarter two of next year. Yeah,

Speaker: 00:35:43

a milestone that I'm sure is at least partially due to the hard work that

Speaker: 00:35:47

the Fercs team at FIS has done over the year.

Speaker: 00:35:51

I would say so. I mean, we've worked really hard, the desk as a

Speaker: 00:35:54

whole, to develop the options market and fertilizer. We keep

Speaker: 00:35:58

pushing and trying to share how these

Speaker: 00:36:02

options and how to use them to manage. People can use them to manage

Speaker: 00:36:06

their risk, and we just keep chugging along

Speaker: 00:36:09

on so. All right, so you've given us a phenomenal

Speaker: 00:36:13

overview of the work that you and the FIS Berks team have

Speaker: 00:36:17

done this year to end. I want to ask you a bit of a personal

Speaker: 00:36:21

question, and that is, George, how did you end up

Speaker: 00:36:24

in first options, of all things? What interested you in this field?

Speaker: 00:36:28

So, in my previous role, I was working with grain risk management,

Speaker: 00:36:32

working alongside farmers and ranchers, kind of manage the risk both in the grain

Speaker: 00:36:36

and the livestock market. And I recall a conversation I had

Speaker: 00:36:40

in 2022, and I had a farmer

Speaker: 00:36:43

I was talking to said that I love to lock in my

Speaker: 00:36:47

December 23 corn because it was over $6. But

Speaker: 00:36:51

I don't know what my input costs are going to be, and I don't know

Speaker: 00:36:54

what the cost of my fertilizer is going to be. And I asked him, well,

Speaker: 00:36:57

why don't you call up your local grain elevator or local co

Speaker: 00:37:01

op and get up a quote? And he says, they can't give me a quote

Speaker: 00:37:05

because they don't know what the price of their fertilizer is going to be. So

Speaker: 00:37:08

I realized that them not having those tools,

Speaker: 00:37:12

whether it's both or the general market not having access

Speaker: 00:37:15

to futures and options, seemed to me like a real problem. And

Speaker: 00:37:19

if I could help in any way, kind of provide ways for these tools to

Speaker: 00:37:23

become more openly available and more

Speaker: 00:37:26

open to the general public, I see myself as helping kind

Speaker: 00:37:30

of solve that initial problem so that the

Speaker: 00:37:33

former, next time he calls up the elevator, the co op, he can get a

Speaker: 00:37:37

quote on FIS fertilizer and then he can go forward

Speaker: 00:37:41

with locking in new crop corn sales. That was beautiful,

Speaker: 00:37:44

George. Thank you so much for joining us. And we can't wait

Speaker: 00:37:48

to hear about all the milestones that you and the FIS desk

Speaker: 00:37:52

hit next year. We will be looking forward to sharing it with you guys

Speaker: 00:37:56

and continue to push know hopefully next time we're going to

Speaker: 00:37:59

have another option even traded or maybe and have him list the next time

Speaker: 00:38:03

we're on freight up. Major ups to George Houston, thank

Speaker: 00:38:07

you so much for joining us. Okay, well, I appreciate your time

Speaker: 00:38:10

and I'll talk to you later.

Speaker: 00:38:17

Now let's catch up on the Ferris complex with how pay.

Speaker: 00:38:21

We still have some information to get out of you for the remainder

Speaker: 00:38:25

of 2023. The first thing that we need

Speaker: 00:38:29

to talk about is that $3 correction two

Speaker: 00:38:33

weeks ago being recovered by

Speaker: 00:38:36

$4 in this last report week. So

Speaker: 00:38:40

the big question is, do you think that iron ore is going to stay above

Speaker: 00:38:44

135 for the rest of. The year compared

Speaker: 00:38:47

with October or early November when iron ore moved

Speaker: 00:38:51

to moved $9 or even about

Speaker: 00:38:54

$10 per week? This is a small change and we can see

Speaker: 00:38:58

clearly iron ore volatility now is decreasing. That's

Speaker: 00:39:02

what we expecting like during the past two weeks. So does

Speaker: 00:39:06

the open interest and volume. This is a typical year end

Speaker: 00:39:09

scenarios because of less traders want to bet on the

Speaker: 00:39:13

direction of market and as well less physical traders on

Speaker: 00:39:17

the market. And although the market has yet any big

Speaker: 00:39:21

correction, we insist on the valuation above

Speaker: 00:39:24

135 is too high. The year high

Speaker: 00:39:27

normally don't show up in December without any big fundamental

Speaker: 00:39:31

change. If we look back for the last ten years, but

Speaker: 00:39:35

the macro support and stimulus on the other side

Speaker: 00:39:39

hasn't stopped. In China, there'll be more housing as well as

Speaker: 00:39:43

potential interest cuts before and

Speaker: 00:39:46

after new year and expected by Bloomberg

Speaker: 00:39:49

analysis. So in general, we don't believe iron ore is at

Speaker: 00:39:53

huge risk from a big correction, like for

Speaker: 00:39:57

example 20% or even 10%. But we think the

Speaker: 00:40:01

high valuation at current level is not sustainable

Speaker: 00:40:04

and a small correction at some point would help the market to turn to a

Speaker: 00:40:08

healthy side thinking about the whole industry chain because

Speaker: 00:40:12

steel mills fis suffering from a loss for three months.

Speaker: 00:40:16

So my conclusion is the high level is not going

Speaker: 00:40:19

to last through the rest of the year.

Speaker: 00:40:23

Oh, hot off the press.

Speaker: 00:40:26

These are how pay's predictions and is that view supported

Speaker: 00:40:30

at all by the fundamentals? Yes, I think the view

Speaker: 00:40:34

that the high level is not going to last through the rest of year

Speaker: 00:40:37

is fully supported by fundamentals because for example,

Speaker: 00:40:41

we're seeing peak iron consumption

Speaker: 00:40:44

representing the demand side of iron ore

Speaker: 00:40:47

directly on a daily basis, is decreasing from

Speaker: 00:40:51

2.48 million tons to 2.29 million

Speaker: 00:40:55

tons and is going to 2.1 million tons

Speaker: 00:40:59

by the end of year early next year. So marginally

Speaker: 00:41:02

decreasing but at slower pace than previous

Speaker: 00:41:05

years. However, the shipment from the other side

Speaker: 00:41:09

is increasing to represent the

Speaker: 00:41:13

supply. So higher supply and

Speaker: 00:41:17

slower demand is definitely equal to a

Speaker: 00:41:20

slight bearish outlook from the current level. But

Speaker: 00:41:24

the only true demand from my side fis cargoes from

Speaker: 00:41:28

Brazil, that demand is increasing because

Speaker: 00:41:31

concerning on the rainy weathers, but the overall is decreasing.

Speaker: 00:41:35

The actual trade was more volatile below

Speaker: 00:41:38

$125 rather than any

Speaker: 00:41:42

trade above this level because below

Speaker: 00:41:45

125 levels we see a lot of massive trading,

Speaker: 00:41:49

like three to four lakens per day on the

Speaker: 00:41:52

seaborne side and a lot of

Speaker: 00:41:55

chinese rent settled on the port side as well. But now

Speaker: 00:41:59

we are seeing like probably one lakers per day and

Speaker: 00:42:03

two lake maybe three or four lakers per week and it's

Speaker: 00:42:06

all flat price. They're using the same premium, a

Speaker: 00:42:10

little bit higher on the fixed price. So I

Speaker: 00:42:13

think any level above 125 is

Speaker: 00:42:17

not sustainable. So I think the fundamental outlook

Speaker: 00:42:21

is totally telling. The current valuation

Speaker: 00:42:24

is at high risk and

Speaker: 00:42:28

it's too high. And any

Speaker: 00:42:32

notes about 2024 that you want to share with our

Speaker: 00:42:35

listeners? I remember that from

Speaker: 00:42:39

the last maybe two podcast before

Speaker: 00:42:43

we had outlook about the

Speaker: 00:42:46

prediction range for the iron ore in 2024. We are

Speaker: 00:42:50

going to maintain that range level. I believe the high is

Speaker: 00:42:54

140 and the low will

Speaker: 00:42:57

be $95 and I think it's a

Speaker: 00:43:00

higher average than 2023

Speaker: 00:43:03

and it have a higher slight higher

Speaker: 00:43:07

highs and slight higher lows than 2023.

Speaker: 00:43:10

And I think the high fis

Speaker: 00:43:14

potentially appear in the first half of

Speaker: 00:43:17

2024 as more of the

Speaker: 00:43:20

stimulus come out before and after

Speaker: 00:43:24

March, when it's China political

Speaker: 00:43:28

conference of the year and the

Speaker: 00:43:31

expectations of us interest cut is more

Speaker: 00:43:35

likely to happen by mid year. If that's going to be the

Speaker: 00:43:39

timestamp, there will be a lot of stories telling. So that's going

Speaker: 00:43:42

to support the volatility of our iron ore. That's why we're potentially seeing the

Speaker: 00:43:46

high in the first half of 2024 and the

Speaker: 00:43:49

low appear in the rest half of the year. Fis, because of

Speaker: 00:43:53

supply from non major miners,

Speaker: 00:43:56

is growing in the next half. And China

Speaker: 00:44:00

domestic miners is expected to

Speaker: 00:44:04

increase some of the projection level in the second half of the year

Speaker: 00:44:08

next year. So that's why we believe

Speaker: 00:44:11

the range of the iron ore index in the

Speaker: 00:44:15

next year. And we'll have you by our side to make sure that

Speaker: 00:44:19

we stay up to date on whatever happens.

Speaker: 00:44:22

How you're a gentleman and a scholar. It's been a

Speaker: 00:44:26

pleasure. We'll see you in 2024. See you guys

Speaker: 00:44:30

in 2024. Thank you for the blondies

Speaker: 00:44:33

with us in 2023. Thank you all.

Speaker: 00:44:37

Well, that's it for us this week. Thank you so much for listening

Speaker: 00:44:41

and thank you for being with us this entire year. It's been

Speaker: 00:44:44

an absolute honor to host this show and frankly, we wouldn't keep doing it

Speaker: 00:44:48

if we didn't know you guys were listening. So, because you insist, we

Speaker: 00:44:52

will see you next year until 2024. Happy

Speaker: 00:44:56

holidays. Break up.

cobalt

Commodities Volatility: Our CEO John Banaszkiewicz looks back at 2023 (and forecasts for 2024)