China’s rising imports of metals, grain, and other commodities increase a bulk-shipping sector at the focus of global industrial production.
Daily freight rates for Capesize ships, the biggest bulk carriers, surged to an 18-month high this week at about $35,000. The Baltic Dry Index, which follows the price of moving commodities by sea, surged to a 10-year high of 2,808.
It’s been a dramatic period, which is very much off-season, stated Peter Sand. Mr. Sand is a chief shipping analyst at the maritime trading body Bimco. Typically demand drops by about 9% from the fourth into the first quarter. It is unusual to see such high demand at this time of the year.
The rebound follows an abrupt drop early last year as factory production decayed at the start of the epidemic. China is now investing in industrial production to feed economic growth, and consumer demand in Western economies is getting stronger.
In the first quarter, China’s iron ore and coal imports were higher, 7.9% and 9%, individually, from a year ago, Bimco stated.
China is the world’s largest commodity importer, making up about 45% of maritime’s dry-bulk market, and shipping officials tell the run looks set to last into the summer.
China and other economies that import dry bulk are growing fast, said Hamish Norton. He is the president of Greece-based, New York-listed Star Bulk Carriers Corp., which operates 128 vessels. Iron, coal, grains, everything goes well at the same time. There is no section of slack. He added that he is pretty positive for an extensive period of margin strength.
Brokers expect huge shipments of Coal in China
Supply-chain disorders from the epidemic also have assisted to push more goods to ocean transport. This is largely due to importers’ attempt to get around backups and blockages.
For example, seaborne coal volumes into China are rising after last year because trucks hauling the mineral from Mongolia can’t pass the Chinese border due to coronavirus limitations. Metallurgical coal is necessary to produce iron ore.
Australian coal cargoes have been barred at Chinese ports across the past year following a diplomatic spat between Canberra and Beijing over the latter’s handling of the pandemic.
Brokers stated they expect huge shipments of China-destined coal from Indonesia, Russia, and South Africa this year and a progressive normalization of imports from Australia.
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