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Asia Shipping Pulse
Capesize market riding a wave
Event
Over the past month, Capesize rates have rebounded 157% from with the
Baltic 4 T/C Capesize index jumping from US$9,289 on 1 August to close at
US$23,899 on 2 September. We believe that this will prove to be a short-lived
rally, possibly ending by the end of September, as new tonnage continues to
enter the market at a high level. We believe a combination of seasonally high
exports of iron ore, especially from Brazil to China, and concerns over
chartering vessels that may be impounded have contributed to the weak
market. Port queues in China have also risen.
Impact
Rally in iron ore exports from Brazil: Iron ore exports out of Brazil jumped in
August to a year-high of 29.8mt, up from 21.4mt in July and the average
shipments of 21.6mt per month through July in 2011. In each of the past three
weeks shipments have averaged 6.1-6.4mt vs the weekly average of 5.1mt
from January through mid-August. Shipments out of Western Australia have
also been robust, though more in line with the YTD average of 9.3mt per week.
China looking well stocked: Macquarie’s Shanghai-based iron ore analyst
Graeme Train noted that iron ore inventories held at 50 smaller mills stood at
just over 31 days at the end of August. When mills last had inventories at this
level at the end of May, they pulled back from the market. Steel production in
China remains robust, averaging around 710mt pa in August as mills report
strong orders. Trader inventories have picked up, however, and steel prices
have barely moved in August, leading us to conclude that steel production is
likely to stay around the 700mt pa level.
Rally limited to Capesize vessels: So far in 3Q, other vessel sizes have
seen rates fall compared with 1H 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Asia Shipping Pulse
Capesize market riding a wave
Event
Over the past month, Capesize rates have rebounded 157% from with the
Baltic 4 T/C Capesize index jumping from US$9,289 on 1 August to close at
US$23,899 on 2 September. We believe that this will prove to be a short-lived
rally, possibly ending by the end of September, as new tonnage continues to
enter the market at a high level. We believe a combination of seasonally high
exports of iron ore, especially from Brazil to China, and concerns over
chartering vessels that may be impounded have contributed to the weak
market. Port queues in China have also risen.
Impact
Rally in iron ore exports from Brazil: Iron ore exports out of Brazil jumped in
August to a year-high of 29.8mt, up from 21.4mt in July and the average
shipments of 21.6mt per month through July in 2011. In each of the past three
weeks shipments have averaged 6.1-6.4mt vs the weekly average of 5.1mt
from January through mid-August. Shipments out of Western Australia have
also been robust, though more in line with the YTD average of 9.3mt per week.
China looking well stocked: Macquarie’s Shanghai-based iron ore analyst
Graeme Train noted that iron ore inventories held at 50 smaller mills stood at
just over 31 days at the end of August. When mills last had inventories at this
level at the end of May, they pulled back from the market. Steel production in
China remains robust, averaging around 710mt pa in August as mills report
strong orders. Trader inventories have picked up, however, and steel prices
have barely moved in August, leading us to conclude that steel production is
likely to stay around the 700mt pa level.
Rally limited to Capesize vessels: So far in 3Q, other vessel sizes have
seen rates fall compared with 1H 2011.
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