BMTI Dry Bulk Commodity Update (7 June 2021)

Production forecasts were raised by the European Commission for common wheat output in the 27-member bloc of EU countries for the 2021-22 season to 126.2 Mt (from last month’s forecast of 124.8 Mt) or 6.5% higher than the crop of 117.2 Mt registered in the prior season. Forecasts for EU exports of common wheat (soft wheat) were unchanged for the 2021-22 season at 30 Mt (versus 27 Mt exported in the previous season). Predictions for overall wheat stocks were downgraded to 10.8 Mt (from 11.4 Mt) due to increased expectations for use in animal feed.

Turkish steel mills have been having little success in pushing their prices down for scrap imports after global steel prices rose in major markets, including China, over the past week. Assessments for 80:20 HMS 1/2 steel scrap have stabilized at just below US$ 500/mt CFR. Baltic-based scrap suppliers are said to be negotiating a sale to a steel mill based in Marmara for end-July at a price in the range of US$ 497-500/mt CFR. Mills have been bidding suppliers prices down to US$ 470-480/mt CFR for premium scrap, which has been largely rejected by scrap sellers so far, though some analysts predict that slowing in scrap demand over the coming weeks could inspire them to concede by the end of the month. Short sea-based scrap prices have declined slightly in the past week with A3 CIF Marmara prices down by US$ 2-3/mt week-on-week to about US$ 470/mt CFR.

Analysts expect iron ore imports to the European Union to rebound this year after falling in 2020 under the restrictions of the pandemic. The world’s fourth largest iron ore importer, the EU follows China, Japan and South Korea as a globally dominant buyer of seaborne iron ore. Last year saw EU iron ore imports fall by 25.1% year-on-year to 70.3 Mt while EU steel output fell 11.8% YoY to 138.8 Mt. A rebound in demand amid a recovering global economy is likely to see those numbers reverse in 2021 as the steel industry brings production back to pre-corona levels. Brazil remained the top supplier of iron ore to the EU in 2020 (26% of the EU’s iron ore imports), but Brazil-EU shipments fell 45% YoY to 18.2 Mt.

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