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BDI seen falling in H2 on reduced China demand

BDI seen falling in H2 on reduced China demand

Beijing: Latest statistics from China suggest the PRC has peaked in its appetite for both iron ore and coal imports this year, leading analysts to suggest the bull run on the Baltic Dry Index will wither out in the second half of the year.
With the iron ore negotiations being conducted between China and other producers worldwide coming to a close late June, speculative needs have significantly declined, said industrial watchers.
Moreover, data with China Iron and Steel Association show that China's actual iron ore import demand stood at 40 million tons for June. However, the monthly average import from January to May stood at 48.4 million tons, signaling that local producers' import necessities have weakened.
As for coal imports, they are losing their competitive edge in price as compared with domestically produced coal. The latest quotes say that the after tax CIF (cost, insurance and freight) of Australian steam coal was 700 yuan (US$102), almost 100 yuan higher than the CIF of local coal with the same heat rate arriveding at Qinhuangdao Port.
Plus, large coal traders have greatly cut their purchasing plans, so China's coal imports will shrink month on month in July and August, said experts. [30/06/09]

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