China's Demand Slows, BDI Index Unlikely to Jump

Wednesday, August 19, 2009

According to a London report issued Aug. 14, dry bulk freight rate index climbed by 2.5% on Friday at Baltic Mercantile and Shipping Exchange, a moderate rise for two consecutive days.

Royal Bank of Scotland (RBS) indicated in its report that China's bulk commodity import will slow down, and that China's bulk material import is predicted to drop from record high and slacken afterwards, according to Financial Times, Aug. 17.

Fairtheworld.com believes that, due to many factors, the second-half BDI index is unlikely to continue its Q2 high, and will stay at a relatively low level as China's demand for bulk commodity slows and freight capacity increases.

China imported a vast amount of iron ores in the second quarter, driving up BDI index to as much as 4,291 points, a record high in 8 months. However, latest observations on China's port transactions suggested stockpiles in iron ores in most ports. The gobbling-up in the second quarter has led to a high inventory level in iron ores that far exceeds demand.

In addition, China is expected to transfer a large portion of iron ore freight business to India and Brazil as a ramification of the Rio Tinto incident, while reducing shipping volume with India on iron ore.

Ignited by the relationship between China's coal companies and electricity-generating companies and complicated by the low freight rate of dry bulk shipping amidst the global economic slowdown, China's electricity- generating enterprises had suspended domestic coal sourcing for a prolonged time. Now with a rebound of freight rate and as coal price hikes, the situation is reversed, damping the pricing power of imported coals.

Although some developed countries like Japan have showed signs of rebound, the momentum remains weak. Demand for iron ore will stay moderate for quite a long time. Furthermore, since developed countries' infrastructure constructions are not as vibrant as China's, their demand for iron ore will not offset the fall-back of China's domestic demand.

In the boom era of the shipping industry prior to the crisis, a lot of new vessels were being built. Many of the completed vessels have to postpone their delivery during the financial crisis, and these freight capacities will be unleashed in the near future, threatening to drive down the freight rate in the entire dry bulk shipping market.

(www.fairtheworld.com)

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter July 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

News

Canadian Authorities seek to contain oil spill moving down river

Authorities are building a new containment boom to fight an oil spill in a major western Canadian river, officials said on Saturday, after the spill breached a

Ecuador Pays $112 mln Award to Chevron

Ecuador has paid $112 million to energy company Chevron Corp over a four-decade-old contract dispute, even though it remains in disagreement, the head of the central bank has said.

ASEAN in Discord Ahead of Meeting with top China, U.S. Diplomats

Southeast Asian nations were thrown into disarray after Cambodia on Saturday blocked them from issuing a statement referring to an international court ruling against

 
 
Maritime Contracts Maritime Security Naval Architecture Navigation Pod Propulsion Salvage Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1066 sec (9 req/sec)