Must-know: Commodity prices and dry bulk shipping stocks (Part 2: Iron and coal)

Market Realist

Continued from Must-know: Commodity prices and dry bulk shipping stocks (Part 1: Inflation and steel)

Iron and coal prices

Prices for iron ore and coal, the two main raw materials used to make steel, have also fallen. While the price of imported iron ore at major ports in China stood near $150 per metric tonne in January this year, it has recently fallen to $112.5 in May—a downward move of ~27%.

Metallurgical coal

Although metallurgical coal prices have held up better (metallurgical coal is the type of coal used to make steel), they have also fallen.

  • Prices for prime coking coal in China at Pingdingshan (also known as Eagle City, located in the middle east of China) fell from 1,320 renminbi per metric tonne in January to 1,190 renminbi in May.
  • Prices for the same grade of coking coal in Yinchuan also fell from 1,160 renminbi to 1,030 renminbi over the same period.
  • Prices for Australian coking coal heading towards China fell from $140 per metric tonne to $127.14.

As a whole, prices for coking coal have fallen about 10% since January to May.

Although the year-over-year decline in commodity prices mirrors the negative growth in the producer price index (PPI)—which people often associate as a negative for shipping and which generally reflects weak or negative economic growth—falling commodity prices can also increase commodity shipments.

Learn more about commodity prices and shipping stocks

To learn more about commodity prices and their significance for dry bulk shipping stocks, continue to Must-know: Commodity prices and dry bulk shipping stocks (Part 3: imports and prices).

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