The Baltic index is up due to demand from China. click here That sounds good, but its not when you read the details.
"The Baltic Capesize Index climbed by 204 points from Dec 8 to Dec 11 to 1,142 points, a 21.8% increase. On the other hand, the Baltic Panamax Index continued to slide to 422 points on Dec 11 from 481 points on Dec 8."
I appears the increase is coming from India in cape size vessels. India has cut their export taxes and are selling their ore cheap. China is arguing that the spot price is around 20-30% below the contract price.
BHP has just mailed out a letter to its shareholders (see BHP announcements) and are saying "we have excellent customer relationships" and "so far we have been able to substantially maintain our sales volumes through a combination of our normal long term contract and spot business". (Sounds like they are about to rip up the current contract and sign a new one.)
They also say "in developing our projects, our emphasis is on lower risk brown-field expansions in areas we know, rather than start up projects in new geographies".
Kind of makes you wonder just what they are up to now? - What's stopping China and BHP from killing RIO, FMG and the other miners by starving them of export quota? They could then share the bootie and BHP could promise China JVs and more ore at a cheaper rate for a longer term.
FMG Price at posting:
$2.16 Sentiment: None Disclosure: Not Held
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