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Capes take a breather after China-driven rate surge

Capes take a breather after China-driven rate surge

Hong Kong: Rates for capesize bulkers may have flattened out this week but the
underlying demand that has fuelled rapid recent rises, particularly into the
Far East, looks set to continue. Intense recent time charter activity,
particularly by Chinese operators, seems to confirm the bullish tone of the
market from an owner's point of view.
Modern ships have achieved nearly $60,000 a day for six month deals, with
$50,000 a day, plus or minus, for one to three year deals.
From take-off at the beginning of July, capesize earnings on the bellwether
Brazil/China iron ore run have climbed from around $50,000 a day to last
week's $80,000 a day, while round trip earnings on the Australia/China route
are at the $55,000 a day level.
China's almost insatiable demand for iron ore has been a major factor in the
capesize rise. Chinese officials recently revealed that iron ore imports in
the first six months of the year were up 22.9% to 161.4m tonnes and total
imports for 2006 are expected to top 300m tonnes for the whole of 2006.
The level of demand is causing capacity problems at the producer end with
Australia, a leading supplier of iron ore and coal to China, saying scope
for increasing production of both commodities was limited up to end 2007.
Nevertheless iron ore production is expected to increase 13.3% to 305.2m
tonnes over the period.
The Far East demand has dragged the whole market with it as the Atlantic
went short of tonnage.  [11/08/06]

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