new scramble for africa , page-3

From the GBG thread but still relevant to SDL as of course its 'Chinese' related.

Monday, 18 May 2009

"THE Baltic Dry Index has reached its highest level in months as iron ore imports into China have increased, however the picture for iron ore, like all commodities, remains complex.



Macquarie Bank analysts today reported freight rates for cape size vessels have risen some 20% over the past week and are up more than 80% for the past month.

The bank said the rise in shipping rates, as tracked by the Baltic Dry Freight Index, reflected rising shipments of seaborne iron ore into China.

Brazil to China rates have increased from $15 per tonne to $25/t, while rates from Australia to China have also jumped from $6/t to $10.55/t in recent weeks.

“There has been strong demand to bring vessels to Brazil to load up with iron ore destined for China,” the bank said.

“In addition, rates have been boosted by rising port congestion in China, where we understand there is a record high of over 80 vessels (panamax and capesize combined) waiting to unload at the moment.”

The figures support data showing that Chinese iron imports have soared by 19% in the first quarter of 2009 compared to the first quarter of 2008, even though value has declined by some 25%.

Spot prices are also on the up, with analysts from Fairfax in London saying Chinese spot prices had risen around $US1-2/t to $US66-68/t contract freight rate (for Indian ore grading 63.5% iron) last week.

However, the bank said it was concerned freight levels may decline in the second half of the year when congestion at Chinese ports eases and new vessels are delivered.

Macquarie has attributed rising iron ore imports to the Chinese steel mills buying up higher-quality imported ore, especially from Brazil, at “cheap” prices.

Meanwhile, Macquarie said it believed a benchmark iron ore price would be set this year but this would mainly be for non-Chinese buyers.

The bank also said it believed spot iron prices had more upside than downside in coming months thanks to local Chinese iron mines shutting down.

The recent strength in iron ore seems to be echoed in Chinese imports of other materials, such as copper and aluminium.

Chinese copper imports soared to record levels in April, with Macquarie attributing the dramatic rise in imports to stockpiling rather than consumption from end-users."