World Grain - January 2023 - 37

full-city hard lockdowns and taking steps to loosen the
overly restrictive COVID curbs, especially the massive
regular PCR tests. However, many other cities have yet
to catch up, and some cities have even recently introduced
new PCR test requirements, suggesting the central
government has not given clear and direct instruction
yet and local governments are still confused. "
Any opening up of China's economy could spark
economic activity back into life and drive dry bulk demand.
Capesize rates are driven primarily by the steel
industry and shipments of iron ore and there were signs
that Chinese demand was increasing during November
when Chinese crude steel output and prices increased.
Breakwave Advisors predicted that China's steel output
likely bottomed out in late July and noted that
stockpiles have continued to decline.
MSI believes that any improvement in China's property
sector or a relaxation of China's zero-COVID policy
" has the potential to boost demand significantly and
presents a clear upside risk to trade. "
" Progress, however, is likely to be incremental and
take a number of months, especially as we currently
see a significant increase in COVID-19 cases across
China, " the analyst added. " Until such progress, the
freight markets need to contend with the outlook for
what could be particularly weak trade in Q1 2023. "
The Black Sea
Of course, the grains shipping market has been subject
to its own particular travails in 2022, not least because
war in Ukraine has limited exports via the Black Sea
and record-low water levels on the Mississippi River
have stymied the US market.
The Black Sea Grain Initiative (BSGI) has now been
extended into 2023, although exports continue to suffer
delays, tying up bulk carriers as they await clearances
and inspections.
" Despite the renewal of the grain deal, de-congestion
in the region is crucial for the shorter journey of vessels, "
said Tanvi Sharma, research analyst at Drewry.
" Recently, many ballast vessels had to undergo inspections
that were delayed by as many as nine days, while
the waiting time of laden ships stretched for two weeks
in Turkey. As the winter sets in, resolution of such bottlenecks
by the Joint Coordination Centre is essential
for continued supply of grain in the market. "
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World Grain - January 2023

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