Significant shift in commodity patterns in 2023

There was a significant shift in commodity patterns in 2023, the result of a difficult economic environment in China and geopolitical tensions, especially between Russia and Ukraine, according to Signal’s Dry Bulk Annual Report 2023.

The Chinese economic environment in 2023 had a particular impact on iron ore prices and demand for raw materials. The slowdown in Chinese economic growth and strict regulatory requirements hit infrastructure and construction activity, reducing the level of demand for iron ore. Environmental policy measures to reduce steel production capacity hurt global iron ore prices and trade flows.

However, last December it was reported that China channelled nearly $50bn of subsidized loans into policy-oriented banks last month, which indicated that China’s Central Bank was thinking of increasing funding for housing and infrastructure projects to support the economy.

The coal industry also faced difficulties as major Asian economies, including China, Japan, and South Korea, brought in stricter environmental regulations. China committed to cutting its coal consumption between 2026 and 2030 as part of a national strategy to peak carbon emissions.

In the grain segment, 2023 saw Brazilian exports emerging as a major force, poised to challenge the longstanding leadership of the US. However, Brazil’s growth faced its own difficulties late in the year when weather disruptions created opportunities for Argentina’s corn industry in 2024.

Brazil’s weather-related challenges, combined with reported delays in Brazilian planting, have made it possible for the US to look to reestablish its position at the top and enhance its export volumes, particularly during Q1 2024.