A PROCESSION of Capesizes and lower prices are generating a belated iron ore rush from Western Australia. At the same time, Coscobulk is predicting a confident run in the drybulk market, booking tonnage for one year’s timecharter at more than $20,000 a day. However, it’s the spot market that has been showing significant volumes. Thought to have been left in the cold by China, Rio Tinto has come back into the warm. It fixed three cargoes yesterday Dampier/China, at $5.60, $5.70 and $5.80 per tonne. Rio has also been linked with cargo from Canada's Roberts Bank to Thailand. Not to be outdone, BHP Billiton has fixed four cargoes from Western Australia since Friday. So what has caused this flurry of activity? One can only speculate that the big mining companies have agreed a new price structure with the Chinese. This might involve the cancellation of the first quarter 2009 contracts and starting afresh from 1 January. With low freight rates and raw material prices, the market has thus been re-established. But this is merely conjecture and the mining companies are unlikely to trumpet this as a victory. While the Chinese steelmakers are liable to treat the situation with a smug and dignified silence.
UMC Price at posting:
43.0¢ Sentiment: Hold Disclosure: Held
