Dry Bulk
Baltic Indices
BDI 3506 up 190
BCI 4328 up 434
BPI 4177 up 87
BSI 2731 up 103
BHSI 1338 up 24
Dag Kilen: Iron ore prices improving after recent pullback – volumes still thin, according to traders. Spot is currently seen around $132/ton while the Q2 forward contract was traded at $130/ton yesterday. Traders say buyers appear to be waiting below $130/ton while sellers seem to hold back. Iron ore prices recently peaked at close to $140/ton before seeing a pullback to around $130/ton. Meanwhile, iron ore inventories in Chinese ports stood at a year to date high last week of 70.4 mt. According to various media reports, steel producers globally will be resisting the latest 80-90% price hike suggestions from the iron ore producers, saying such prices would dampen a recovery for the steel industry. It is therefore reason to believe that a modest price hike would be the best for the shipping sector, even though any deal could lead to a short term increase in activity level.
Dry FFAs - very good volume as firming physical moves forward prices to the upside
Spot Q2 FFA
Cape: 41877 up 4570 41250 up 2250
PM: 33587 up 701 32250 up 1000
SM: 28561 up 1086 27250 up 500
mike reardon
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Reader Comments (2)
There seems to be two schools of thought burning up the airwaves these days. The first, that most bobbleheads prefer to spew, is that China is overheated and that the government's recent efforts to reign in spending and growth will mean that the People's Republic will slow down their appetite for raw materials. The great dragon engine that has been driving the planet will effectively downshift into neutral until their economy cools down. The second school is a much more muted group, whose voices are mere titters and lost in the grand overtures. This group is more of a "man on the ground" sort of eyewitness which is reporting that just because the government says "slow down" the factories and smelters are still running at nearly full-tilt, so consumption and appetite are still strong. If this was an iceberg, the first group would be the 1/3 visible above the waterline while the second is the one that tests a vessel's two-compartment rating.
But which one is correct? Well, I had a thought. If China's stockpiles of raw materials continue to remain high and there IS a slowdown occurring on the mainland, then China shouldn't care much about the recent ore negotiations. "We've got inventory," they'll say, "And we're slowing down. If we need more, it's cheaper for us to buy a shipload here and there at the spot rate than it is to commit to a 40% hike in fees."
But if the second group is correct, then someone's looking at the dockside stores and flipping beads on an abacus, realizing that "Hey, we don't have enough here to sustain us until the end of the year," so they're going to be more active and involved in the ore negotiations.
So how does one quantify this? My guess is if we see more spot rate purchases by China as opposed to cargo fixing, then we're in the former camp. If more fixed rate purchases are occurring, then the latter case is probably correct.
Does that make sense or should I withdraw my application for 'Prognosticator of the Year'?
Oh, and there was this article in this morning's WSJ, "Export Revival Threatened By Shipping Bottlenecks": http://online.wsj.com/article/SB10001424052748704754604575095331459500018.html