BMTI Dry Bulk Commodity Update (16 Mar 2021)

Sustained limitations in global availability continue to support potash prices around the world. One major producer was reportedly making plans to increase price offers in its European markets by as much as EUR 15/mt beginning in the second quarter. MOP prices have stabilized at around EUR 235-245/mt CIF with average prices trending toward the higher end of this range. Premiums for granular MOP over standard potash grades are said to be widening as well across the UKC-Med fertilizer markets. Potash prices are rising in concert globally with price support especially strong in the US, Brazil and Southeast Asia. Granular MOP from NW Europe (spot) has remained at an average of EUR 240/mt CIF in the second week of March while the price range for USG-based prices has moved from US$ 300-308/ mt FOB to US$ 315-325/mt FOB over the same week. Average US barge prices rose by US$ 13/mt in the first week of March to reach their highest level in five years. A similar spirit of buoyancy is expected to drive prices upward on European markets going into the second quarter of 2021, though the sustainability of the uptick remains hard to assess as demand is only running slightly ahead of supply at present.

Predictions for Black Sea grain exports continue to fluctuate. The recent surge in Russia’s wheat exports has inspired agriculture analysts Sovecon to upgrade their newest forecast for Russian wheat exports in the 2020/21 season by 1.2 Mt to 39.1 Mt. Russia has this year been taking steps to dampen exports and try to cool overheated prices by doubling its export tax to US$ 60/mt. Increased supply ahead of the next tax change in June (with a formula-based export tax) as well as greater shipments from Kazakhstan are expected to boost Russian wheat exports further going into Q2. Ukraine’s grain exports are down by 21.3% YoY in the 2021/21 season (that started in July 2020), amounting to 13.77 Mt of wheat, 13.96 Mt of corn and 3.96 Mt of barley.

CIF prices for short sea scrap shipments to Turkey (Marmara) have stabilized at around US$ 438/mt (basis HMS 1/2 80:20), says Argus, based on a recent sale from Romania. Short sea freights for scrap from Rostov to Marmara have declined to about US$ 32/mt. Supply of scrap is said to have been sufficient for Turkish mills, hence the flattening in prices after an extended period of improvement. In related news, market observers have seen a notable increase in ferrous scrap exports to Turkey from the Baltic in recent months, driven in large part by lower scrap consumption by Baltic-based steelmakers. The share of deep sea scrap shipments to Turkey that were of Baltic and/or Scandinavian origin over the past eight months has climbed to 26.2% versus a 19.6% share in the first six months of 2020. Ferrous scrap imports to Turkey from non-Russian Baltic countries increased by 33.9% year-on-year in 2020 to 2.55 Mt, notably faster than the general 19.2% rise in Turkish scrap imports measured over the same time period. Even more specifically, scrap exports to Turkey from Lithuania (mostly ex-Klaipeda) and Poland rose by 66% and 46%, respectively, to 0.99 Mt and 0.42 Mt in 2020. Scrap to Turkey from Finland, meanwhile, rose by a whopping 226% YoY last year to 0.30 Mt.

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