A frenetic day of cape fixtures yesterday saw front-haul voyages reach $30,000 per day, pushing the Baltic Dry Index above 1,000 points for the first time this year.
“It is hard to argue that this is not an indicator of the Chinese economy, which is once again expanding,” Ed Hutton, technical analyst at Freight Investor Services, told Splash today.
Steel production is at record highs with blast furnace utilisation rates in China now above 90%.
“A thirst for iron ore coupled with Vale remaining committed to its year end production targets has seen the list of ballasting vessels shrink,” Hutton said.
Braemar ACM Research’s latest report shows iron ore liftings in both basins have remained strong over June so far, as the main producers – Australia and Brazil – up their export pace, which have led to a rally in capesize rates.
“Obviously, charterers are taken aback by the shipowners’ higher expectations, but fixtures are done at higher levels and there seems to be no stopping in the upsurge for the time being,” brokers Lorentzen & Stemoco stated in a report today.
Peter Sand, chief shipping analyst at BIMCO, reckoned it is still too early to cheer for the improvement in the market as all sectors are still loss-making, even if capesizes managed to hit $14,700 per day as of yesterday.
“Sentiment can be a strong force – and as much as I would love to see profits back – a decline in demand is not going to bring that around. At least not around to stay for a long time. For now, let’s celebrate that magic can really happen and our old friend volatility is back,” Sand said.