Global Spot Chartering Activity Has Increased
Through the first three days of this week, the Baltic Dry Index has risen by 26 points to 956 points. This represents an increase of 3% from the end of last week. It is encouraging that rates have increased, with gains seen in the capesize, panamax, and supramax segments of the market. Spot chartering activity is inconclusive for this week, though, as there was a holiday in Monday.
Chinese Iron Ore Production Remains Low
Recently released data shows that domestic iron ore production in China totaled 120.9 million tons in March. This puts Q1’s production total at 304.2 million tons, which is 16.8 million tons (6%) more than was produced during Q1 2013. While Chinese iron ore production has continued to increase from last year’s level, the pace of growth continues to pale in comparison to growth in Chinese iron ore imports. Chinese iron ore production has increased this year by 6%, while Chinese iron ore imports have increased by 19%. This year's ongoing sharp rise in Chinese iron ore imports remains very encouraging for the capesize segment of the dry bulk shipping market.
Chinese Electricity Production Remains Robust
China produced 453 billion kilowatt hours of electricity in March, which marked an increase of 45 billion kilowatt hours (11%) from the 408 billon kilowatt hour average produced during January and February (electricity production figures for January and February are released as a two-month total due to Lunar New Year). Compared with the 419 billion kilowatt hours that was produced during March 2013, last month’s production marked a year-on-year increase of 34 billion kilowatt hours (8%) which is very encouraging. Overall, Chinese demand for electricity remains robust. This will continue to result in significant demand for thermal coal, and coal imports in China are likely to increase during the months ahead.
Chinese Iron Ore Imports Remain Robust
Rates for most freight routes used to ship coal along the Chinese coast increased last week. The cost to ship coal from Qinhuangdao (which is the loading port for about 40% of China’s coastal coal shipments) to Shanghai has increased to approximately $4.59/ton, $0.07 (2%) more than a week ago. The cost to ship coal from Qinhuangdao to Guangzhou (located in southeastern China) has risen to approximately $6.27/ton, $0.20 (3%) more than a week ago. It is encouraging that Chinese coal coal freight rates are on the rise. Going forward, more Chinese owners might employ their vessels in the domestic Chinese coastal coal shipping market in the near-term, rather than the global dry bulk shipping market. This would help global dry bulk shipping rates find additional support in the near term.