BIMCO reported that China's average daily crude steel output reached a record 2.29 million metric tons in April as steel mills lifted production to meet seasonal demand, though signs of weakness in factory output and the property sector could feed through later in the year.
Steel demand in China traditionally improves in Q2 as construction and manufacturing pick up with better weather.
April's crude steel output of 68.84 million metric tons was below the record high of 70.25 million metric tons in March, according to China's National Bureau of Statistics.
Peter Sand, BIMCO’s Chief Shipping Analyst, said, "Despite the encouraging data from China, the dry bulk market is currently weaker than expected. Chinese iron ore demand has helped, primarily in the Capesize segment (currently at $11,228 per day), whereas the smaller segments suffered more significantly from a soft patch in demand and fundamental oversupply."
Last week, China reported iron ore imports 83.39 million metric tons in for April, the second highest monthly figure on record, second only to January 2014 (86.8 mt). Iron ore imports in the first four months of 2014 were 305.3 million metric tons, up 21% year-on-year, BIMCO said.
Sand added, "BIMCO expects the market to improve steadily going forward, as tonnage demand, first and foremost in the Atlantic basin, picks up. Our demand expectations for the full year remain unchanged."