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China's hunger keeps the market cooking

by Lloyd's List Correspondent | 11:56AM, 22 May 2008


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China's insatiable appetite for commodities continued to push Baltic Exchange capesize and handysize indices to record highs for the sixth and seventh consecutive days respectively.

Brokers reported slower activity yesterday, but the overheating market has resisted attempts to cool it down and lower freight rates.

“The capesize market is steady, but really from lack of activity only,” Clarksons director Nick Collins said.

“I would not infer from that lack of activity and fixing at all that there's a lack of strength. People are pausing for breath, the market is strong, really strong.”

Owners of capesize vessels could still more or less name their price, he said.

Australian iron ore producers have propelled the boom and again paid new record prices to transport iron ore from Western Australia to China.

BHP Billiton yesterday took another two capesizes on voyage charter, and time chartered a further two. That brings the number of capesize ships fixed for WA loadings in the last two weeks to 20, according to the Baltic Exchange.

After standing back for most of the month, rival iron ore producer Rio Tinto also joined in the fray, taking three capesizes on time charter.

Handysize and supramax vessels had also seen rates rapidly lift on the back of booming activity in southeast Asia, especially India and China, buoyed by the busy South American grain export season.

The Baltic capesize index reached 18,128, up 23 points, while the supramax index gained 68 points to reach 6,709 and the handysize index lifted 15 points to 3,397.

However, the panamax index dropped 178 points to 11,247, bringing the Baltic dry bulk index to 11,771 points yesterday.