Iron Ore takes a dive – but can it rebound from 118?

The iron ore index took quite the dive, but can we expect a quick rebound

from its current position at $116 to

$118? How pay has a hot take for you.

On the freight side, we take a look at the Cape sizes surge and its

much felt ripple across the FFA market. Don't miss out on the

Pacific's rising tides and the Atlantic steady currents.

If that's not enough, Archie Smith delves into OPEC's extended

cuts and the future of Brent crude prices. All this and more on

freight up. Freight up.

Hello and welcome back to freight up. My name fis Fernanda and I'll be your

host as we navigate the seas of great commodities. I'm joined once again

by Davide. Ciao, Davide Comastai. Ciao, Fernanda.

I'm doing great. How are you today? Doing real well. What do you got on

the money for us? We have our usual roundup of the latest

commodity and macronews, and then I was thinking of a three course deal with

Haupei on iron ore bank, lang on dry freight and

Archie on fuel oil. What does it look like? Sounds filling. Let's get

into it then. So first this

week, let's take a quick look at the commodity

news. The OPEC plus members have extended their voluntary cuts

to oil production until the end of June, as it was announced

by the Saudi Arabia state agency. By the way, if you'd like to know

more about it, don't miss our latest article on

LinkedIn. This week we saw a series of preliminary estimates

for inflation in Europe. The rates slowed to 2.9% in

February from 3.1 in January in France, dropped to

2.5 from 2.9 in Germany, and remained stable

at 0.8 in Italy, which should be a happy thing for

Davide. In other news, the International Energy Agency

said in its latest report that the world's carbon dioxide emissions from

energy rose substantially to new records in 2023,

37.4 billion tons, despite the

decrease of use in fossil fuels.

So before we get into the detail of our major commodity

markets, let's take a look at the broad market movements of the week,

which are quite positive. On the freight side, we've seen some big movements

in the Cape size index again. They went up like

29% week on week from Tuesday the 27 February to

Tuesday the 5 March, after a similar rise up last week,

which has also led the smaller ships. And they all moved up. So Panamax

five TC index went up just over $2,000 a day, week

on week. Supramax ten TC index went up

6.4% or $854 and the

handy size 70 c went up 13% or

$13,599 a day.

And now let's talk about iron ore with Hao Pay. So how

the big headline this week was China's polite borough conference on Monday

and Tuesday. What Ferris news if any came out. Of it,

it was a big conference. Since all of our brokers is asking

like what was the update for the conference today and what was

yesterday? It's really big event. There should be some coming

out in late this week as well and the original policy

probably coming in the next two weeks. I mean the more

details of the policies we only get more

of headlines and the government reports during

this afternoon. I think the biggest stimulus including a

decreasing on a five year length loan, prime rate in

February and many housing loans cut in January.

So there could be some more policies coming, but no

surprises. To be honest, the government report set the

same GDP growth target and the same deficit

ratio. And because 2023

the last year Hao already set everything into

extreme high and extreme high liquidity to

boost its economy, the only surprise was the government is going to

issue 1 trillion yuan or

$139,000,000,000 of the

ultra loan specialized bonds to support the economy.

That's what happened during this year in the next three quarters.

So that's the big headline. That's quite the surprise

considering that when we spoke last week the iron ore index was

wallowing at about 116 118. In light of

this, do you think we can expect a rebound from here? Yeah, I think

unlike the surprising events is rolling on, but

the index was quite boring during the past week. Well in

short run I think we are at least stabilized here.

That's the good news. Iron ore is getting out of biggest

trouble like eyeing 20% index drop

and eyeing some recovery on construction sites and the

production of steels created the fastest single week growth

over the past five months last week and we also

expecting production is going fast this week as

well. The data is coming out tomorrow afternoon. And

however in general seasonal wise I think the pick iron

production is and average 1% at least lower than

the past January and February and

more. The port inventories are

increasing faster than any of the February deliveries

expected to pick up in March. Those are bad news to

create resistance in mid run and however in short

run we saw some improving margins on both derivative side

and physical side and it should be a trend which should

support iron ore in short run. So in general I hold a

stabilization view on iron ore in short Run. However so

far in mid run, iron ore is overvalued at even

this level, and index number shouldn't be the lowest

of the year at the current level. Well, it sounds like we're in for

quite a ride, but luckily we have you to keep us informed.

Hal, thank you so much for your time this week, and we'll see you next

time. Thank you, Fernanda.

And now let's talk about dry freight with Ben Klang. Hi,

Ben. How are you doing? Very well, thank you. Thank you very much.

Glad to have you back again on the show. So, Ben, we've seen

another good movement up on the indexes and especially on the Cape

size. So how has this fed through the wider

market? Yes, exactly. Well, you know, if we first take a

look at the Cape FFA market, we saw increasing

physical activity in the Pacific alongside steady

rates in the atlantic region for both transatlantic and

frontal business. This pushed the TC spot rate towards

the 35,000 mark. And we also saw high

demand was evidenced on the key c five iron ore

route from West Australia to China, with

rates lifting to over $12 for the end of

March. As the week progressed and 1490

reported on Monday, the Cape FFA market

began the week with a sell off, with early trades in March at

28,020

7750, before gapping down to

$27,000, where good volume changed

hand. Midweek, we saw reverse in this trend with good

movements up across the curb, March moving up to

30,300, while Cal 25

traded up to 22,000 on Wednesday.

Early morning rates on Tuesday, we saw the market

gap up, with March and Q two trading up to

31,750 and

31,500. And notably, Cal

25 traded of 85 days per

month at $22,000. On Friday, we

saw Q two paid at 30 and a half, with March

eventually getting to a high of

35,000. And if we look at the Panamax

vessel, the week began on a softer note but was quickly

lifted by a firm Cape market and rising FFA

prices. In Atlantic, a healthy level of minerals and

grain trade continued to provide some support. And

on the coal front, demand again proved to be strong last week with

higher cargo volumes out of Australia and Indonesia

and on the Panamax FFA, which has been range bound

trading lately. The week began with initial bid support

being tested, with March printing at

15,350 down to 15 and a

quarter, and Q two at

16,750. With the index moving into the

green through the week, this helped to bring some positive moves to the

market. We saw good support across the curve

to close the week, pushing the Cape

move. March printed 16,600 and

Q two printed up to 18,100 Monday.

This week open with good sizes. March printed at

17,000 and a quarter and Q two traded up to

19,000. The evening saw March traded down

to 16,650 and Q two

closed trading at 18,300. And on

the supermax, where it's similar to the Panamaxes with

range bound trading with rates gradually slipping before

being bid up midweek. Tuesday we saw March trade up

to

while Q two traded up to 16,000. We

did see some post index offer pressure on

Thursday, with front contracts off around

$1,000 before an end of the week recovery that

continued this week. As with both capes and Panamaxes,

we saw another cooling off on trading yesterday. Thank you,

Ben. And what about volumes? So we have reported a high on the year last

week. So how's the last week gone? Well, once again,

Cape took the spotlight in last week's trading, with trading

volume reaching over 9100

days per day compared to

5300 days for Panamaxes and

1600 days for supermaxes. As

February jewelry too close, we noticed a massive volume

increase in the c five voyage route amid

growing interest from market participants, especially from

ship owners and operator side. C five

volume hit a record high of 24,320

lots or 24.35 million

tons equivalent into February and

35,195 lots or

36,000.195

million tons in the past two months, which is up

104.8% month on month

and 122% year on year

respectively. Ben, thank you very much for your update. And

ladies and gentlemen, if you want to get in touch with Ben in Copenhagen, just

shoot him an email at benk@freightinvestor.com Ben Lang, ladies

and gentlemen, thank you. Thank you very much.

And now let's talk to your loyal with Archie Smith.

Archie, you're alive. I'm alive,

yes, survived. You made it past last week.

There's quite a few things going on in your world that we need you to

tell us about. So we recently learned that OPEC plus cuts

will continue until the end of June. Brent crude prices are rising,

but much to Saudi Arabia should grant, analysts believe that it's not going to reach

the $100 a barrel bar. What's your hot take on this?

Yeah, I mean, the cuts getting extended by OPEC

were very expected by the market. So

for that to have a major impact on prices was a bit of a stretch.

I think what came as more of a surprise was actually

Russia have decided to cut a

further almost 500,000 barrels a day in production and exports

in Q two. I think that was the more kind of surprising thing that the

market didn't expect as much. So that along with the

geopolitical tensions, definitely has the potential

to add support to the prices. I think the OPEC

cuts on their own won't be enough because I mean, they've been

cutting since summer last year. So it was kind of priced

in, I would imagine, already by the market. And like I said, the

Russian further cuts the exports. That was a surprise.

And that's kind of helped to bolster prices and the kind of longevity of that.

Well, I suppose time will tell with regards to the $100 per barrel

mark. Yeah, I mean, my opinion is cuts

alone won't be enough to hit that level. You're already seeing it

from a lot of the investment banks and a lot of the kind of energy

majors who release forecasts on the Brent

crude for 2024. Some of them who were coming in above

the $100 per barrel mark last year, kind of at

each revision that's been reduced and reduced and reduced. And some of them are

either on track to go sub 100 or already are sub 100, kind of around

$90 per barrel mark 85, whatever it may be, depending on the

bank or institution that you're looking at. So yeah, cuts

alone for $100 per barrel mark. My opinion though, I think that's going to come

more from an escalation in conflicts, wherever that may be,

Russia, Ukraine or Middle East. I have another question for you, which

is on the front, very low sulfur fuel oil cracks and

spreads, which we've seen being more volatile than usual at the beginning of this

week. Can you maybe tell us why this happened? Monday

morning had some deal big swings in the

cracks, particularly in the Singh window, which is the Singapore closing window,

which is kind of morning time. Europe finishes around 830.

It's normally about eight to 08:30 a.m. London time. This is

when there is some real big volatility, which fis fairly

usual in the Singapore window anyway, that's just kind of usual

trading activity. This week in particular, what we were

hearing from the market was that a particularly big

asian player had got back on the bid side after quite a long

hiatus. So they were coming back into the physical window buying

fuel, and that was pushing the price up quite drastically.

So the April crack got to about $15 per

barrel, which is certainly a recent high,

but it was swinging kind of 20 $0.15 during the window, and it

has since the last couple of days, it has cooled right off. So we're actually

a dollar down from that $15 high when I left my desk. It's trading around

fourteen s. The reason we've kind of see it slip off the last couple of

days is because the daily 0.5 Singh settlements

have come in quite a lot lower than what the market expected, which has added

quite a lot of downward pressure on the front month. That's the reason we've kind

of seen it slip back. And on the topic of

cracks, the high sulfur crack, we're looking at this time for Europe

in particular, fis up about a dollar 50 on the week. And

I think we could expect to see that climb higher as we go

into the refinery maintenance season for Europe, which kind

of starts march and runs through. I think, you know, with

that ongoing, we could see that european high self creep even further

up. All right, Archie. Well, thank you so much for that. And on

behalf of all of your legions of fans, I

thank you. Thank you very much. Good to be on the show again, and I'll

see you next week. Well, that's it for us this week.

Thank you so much for joining us. And if you haven't already, make sure to

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