11.3-11.5 Hot Issues in the Dry Bulk Market

2014-11-06

Strong Capesize and Panamax Freight Rates

Through the first three days of this week, the Baltic Dry Index has increased by 36 points to 1,464 points. This represents an increase of 3% from the end of last week. Capesize and panamax rates have continued to fare the best. Capesize rates are currently averaging $26,381/day, a very strong rate which is likely to rise much further this year. Demand for capesize vessels remains very strong but availability is tight which leads to great strength in rates. Global spot chartering activity has increased this week. A total of 58 dry bulk cargoes have been chartered in the spot market so far this week. In comparison, 56 cargoes were chartered during the first three days of last week.

China Importing More Coal from Australia Again

Six vessels have so far been chartered to haul Australian coal cargoes to buyers in China this week. This is a large amount for three day's worth of chartering activity and is especially encouraging considering that China's coal import tariff (which most affects Australian cargoes) officially remains in place. While there has been much talk that Australia has been able to secure a removal of the tariff once the free-trade agreement (FTA) between the two nations is reached, such an agreement has not been reached and previously only a very small amount of vessels were being charted to haul Australian coal cargoes to buyers in China. It is encouraging for the dry bulk shipping market that China is now importing more coal from Australia again.

Temperatures Turning Much Colder in Northern China

Peak winter electricity demand season in China is quickly approaching, and now temperatures are suddenly about to turn much colder. While temperatures reached a low of 9.5 degrees Celsius in Beijing on Friday, this week is expected to see much colder temperatures with lows expected to hit 1.5 degrees Celsius. The coldest weather is of course in northern China, but temperatures approaching the freezing level is a significant point as residential heating demand will begin. Overall, by December China remains very likely to see a very large rise in thermal coal-derived electricity production with it remaining likely that production will set a record. This will help Chinese coal imports find support, which is encouraging for panamax, capesize, and supramax rates.

Source from : CNSS

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