BMTI Dry Bulk Commodity Update (23 Apr 2020)

iron ore loaderPersistently poor demand has applied steady and bearish pressure to commodity prices around the world. Iron ore prices have not been spared. Even with widespread suspension in mining operations and force majeure declarations curbing overall sup­ply, a larger lack of demand, particularly by steel mills, has meant that buyers continue to dominate the trade, calling the shots and deciding what prices they are willing to pay. Iron ore inventories are rising to historical levels with stocks reaching upwards of four months long. The COVID-19 outbreak contin­ues to have ripple effects in the global steel industry. Global iron ore prices declined under US$ 90/mt last month after trading around US$ 96/mt in Jan­uary and achieving of high of US$ 120/mt in July 2019. Current spot prices are in the low US$ 80s/ mt range of around US$ 83-84/mt, traders report.

Market prices for European wheat continue to climb, having reached their highest level in over a year last week, with dry weather across much of Europe and the Black Sea regions contributing to perceived sup­ply shortages. Front-month futures for wheat rose nearly 4% last week on the Euronext market in Paris to EUR 206/mt, the highest since January 2019. Talk that Russia was planning to exit the export market earlier than normal added more concern about wheat supply across the Black Sea markets. Deputy agriculture minister Oksana Lut said Russia intended to suspend exports until 1 July as soon as its Q2 export quota was reached. So much wheat has been exported from Germany in recent weeks, the market has perceived a lack of supply across the Continent, according to commodity analysts.

In the context of mining suspensions and an overall decline in commodity movements, fertilizer prices have remained relatively stable, perhaps reflective of the ongoing demand for agriculture products and recent surges in demand for grains amid panic-buying trends across the world. European-based prices for granular bulk potash have been steady even as the spread has widened with around US$ 200-245/mt FOB ex-Baltic on the current spot market, more or less unchanged from early April. CIF prices for granular bulk potash on contract basis in Northwest Europe have also been trading steady at around US$ 245-250/mt. Standard bulk prices on Baltic Sea basis, meanwhile, are unchanged within the range of US$ 200-263/mt FOB.

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