Wednesday, February 11, 2009
Wednesday, 11 February 2009
A surge in shipping rates for bulk carriers, used to transport cargoes of wheat, coal and iron ore, has created a frisson of excitement about signs of recovery in trade with China. The Baltic Dry Index, a measure of freight rates for dry bulk vessels, gained 10 per cent in value yesterday after a 50 per cent increase last week as mining companies scrambled to hire ships to deliver iron ore to China.
The burst of upward momentum follows last year's collapse as Chinese mills and factories shut down. Many fleet owners faced bankruptcy as rates plunged below the economic cost of their vessels and the Dry Index fell 90 per cent over six months.
However, there is some evidence that China's stockpiles of iron ore are shrinking and the Baltic Exchange reports that importers are taking advantage of better iron prices to buy spot cargoes.
Rates for the largest Capesize vessels have doubled from $17,270 per day at the end of January to more than $34,000 per day and the cost of shipping coal from South Africa to Rotterdam has leapt from $7 per tonne in January to $10 per tonne.
Opinion is divided about a recovery in trade with Morgan Stanley arguing that “the worst is over” for shipping while Citigroup says that commodity prices are undergoing a short-term rally and it expects them to remain weak into 2010.
Optimists see the renewed interest in vessel chartering as evidence that China's $600 billion infrastructure stimulus is beginning to generate demand from Chinese steel mills.
Meanwhile, other commodity prices are showing signs of life, including copper which rallied 12 per cent last week and rose again yesterday.
Wheat goes from strength to strength; a drought in China's wheat-growing regions is creating demand for grain from Australia, which had a record wheat crop.
Source: Times Online