India has had a decline in iron ore exports throughout the third quarter and in addition, they have concluded a large iron ore contract from Brazil to India for 5 million tonnes, which can indicate a new trend and trading pattern for dry cargo. For a tonne mile scenario, we’ve had very much welcome more iron ore imports to India from Brazil. So, where has all the increased landed iron ore tonnes being absorbed? Well, China is the world’s largest steel producer, accounting for 56% of global steel output. Contrary to negative macro news, China’s steel production is up 2% year-on-year with a solid 4.5% increase in Q3. Although property investments are down about 9%, we see that the Chinese iron ore production is down and rotation to technology-intensive manufacturing and energy transition with infrastructure investment is up 9% year-on-year, and private manufacturing investments are up 6%.
In addition, Chinese car exports were up 62%, as steel exports 30% year-on-year, which equates to about 80 million tonnes of iron ore. As we have discussed earlier this year, the bauxite trade from Guinea has developed into a steady long haul Capesize trade, predominantly into China. This bauxite trade has dominated a total global Cape tonne mile with a staggering 12.5%. In addition, it’s inversely seasonal to the iron ore trade from Brazil, which makes it tempting to assume that the coming Q1 will be more volatile and interesting than we’ve seen in many years. We see an upside to this trade into 2024 and we will position large parts of our fleet accordingly. The supply side is still looking vastly compelling in the dry space. The total dry order book is around 8% of the total fleet and even more learning is the Capesize segment, where we have 5% of the total fleet ordered for newbuildings.
Historically, this remains at an all-time low and combined with unusual low congestion is still suggests that the downside is priced already. To round off this presentation, we would like to show you the significant earnings potential in Golden Ocean as we finish off the volatile dry cargo year for 2023. Keeping in mind the premium we achieve on our fleet, the graph on the right shows the substantial cash flow potential and yield at various freight levels. As an example to achieve a 25% yield, you must need an average Baltic index rate of 20,000 per day, if you apply the 2023 year-to-date performed Golden Ocean premium of $5,000, while the current spot market suggests a free cash flow yield of approximately 30%. With that, thank you very much for listening and I will pass the word back over to the operator.
Operator: [Operator Instructions] And the question comes from the line of Sherif Elmaghrabi from BTIG. Please ask your question. Your line is open.
Sherif Elmaghrabi: Hi, good afternoon. Thanks for taking my questions.
Lars-Christian Svensen: Hi Sherif.
Sherif Elmaghrabi: Hi. I just wanted to first focus on the Supramax that you sold. It sounds like the purchase option and then subsequent sale is a pretty unique opportunity, but are there any other upcoming options on the 8-K that you’ve time chartered in, which could present a similar opportunity or could you even hang onto that tonnage given where asset prices are today?
Lars-Christian Svensen: Yes, thank you for that. I think first of all, when it comes to the Supramax vessel that is something that we consider non-core business. So for us to be able to do a good market transaction, we thought that was a good idea. When it comes to Capesizes, which we absolutely consider core business, we are definitely interested in declaring options if it makes sense to the market at that time.
Sherif Elmaghrabi: Okay. And then turning to scrubbers, the scrubber premiums really widened over the last few months. And so just with that in mind, could we see scrubbers installed on other vessels in the fleet, as they come in for dry-dock or special survey?
Lars-Christian Svensen: Yes, definitely. If there is a young enough assets that we see potential and we will upgrade as many of them as possible in the next dry dock cycle.
Sherif Elmaghrabi: Okay. Thanks for taking my question.
Lars-Christian Svensen: Thank you, Sherif.
Operator: [Operator Instructions] And the question comes from the line of Omar Nokta from Jefferies. Please ask your question.
Omar Nokta: Hi, there. Hi guys, good afternoon.
Lars-Christian Svensen: Hi Omar.
Omar Nokta: Hi. Yes, I just wanted to ask, you know, obviously, you highlighted the overall the strong sort of quality of the Golden Ocean fleet. I wanted to ask, obviously, 3Q was supposed to be generally or had been a pretty soft quarter when we look at just spot market averages and looking at what companies in this sector have reported, but you guys generally kind of came in sort of flattish or maybe even cash flow generation was a bit better. So just wanted to ask, kind of what drove that improvement that sequential sort of modest improvement, was that sort of well-timed time charters or some spot performance, that was a bit beyond expectations. Any color you can give on that?
Lars-Christian Svensen: Yes, no, I think entering into the quarter, we were quite covered on the Panamax front. We realized quite quickly that we needed to have some more exposure there to capture the market. So we turned every stone to be able to add on some more spot exposure on the Panamaxes, which yielded well Same thing when it came to Capesizes. As we discussed in the previous quarter as well, we had fairly high confidence in the second half of this year, simply because of the many drivers that we see on the coal and the bauxite, and also Brazil performing the way it should do. So for us going into this quarter, it was quite clear that we wanted quite a bit of spot exposure and luckily we got this one there.
