Steel demand has not yet displayed any credible signs of improvement for this September, the typical month when demand increases in China. September and October, nicknamed “Golden September, Silver October 金九银十 ” are regarded as the high season for auto / real estate sales in the country, with customers traditionally returning to make purchases after summer. It was reported by Argus that some steel mills in China's Yunnan province were planning to shut down blast furnaces for maintenances due to losses.
Meantime, Chinese steel mills’ iron ore inventories had plunged to a record low, China’s stockpiles across 45 ports is at a 4-year high.In general, steelmakers lacked the confidence to restock as profit margin keep deteriorating while there’s optimism they may restock some before middle autumn festival and national day. However, this year is fraught with high uncertainties as lockdowns persist (see Shenzhen and Chengdu), threatening the already faltering property market. This had sapped the strength of seaborne demand for iron ore, contributing to an uncharacteristic demise of Capesize aka the C5TC market.
Unless there’s a material adjustment in the above-mentioned circumstances, structural headwinds is to be expected ahead for Capesize vessels. Meantime, any news of Chinese authorities introducing fresh fiscal stimulus/cutting interests rates should rightly be treated with a decent amount of skepticism given the economic/social “handcuffs” imposed onto society at large.