Resumption of iron ore bolsters Baltic index

Following the resumption of iron ore imports by China, the Baltic Exchange’s leading shipping index, which tracks key commodities shipping rates, rose to a new three-month high on February 6, Exim News Service said.

The index rose by 9.61 per cent to 1,642 points from 1,498 points on February 5.

Brokers said it was too early to say whether the rise in the index—a leading indicator of economic vitality—reflected the start of a recovery in world economy. They pointed out that the shipping market was highly volatile.

One trader said the market improvement was enough to allow shipping companies to avoid going out of business, but was still modest."It’s not necessarily a good indicator of the health of the world economy; it’s a

great indicator of what demand for bulk commodities there is from importers, basically China," the trader explained.

According to some estimates, around 68 million tonnes of ore had piled up at Chinese ports by late November, with another 125 million tonnes stored at steel mills.

Apart from iron ore demand, China is also the world’s top consumer of wheat, and has been buying the grain from the US and Australia as well as other sources in recent months.

The country has declared an emergency over a drought that could threaten its wheat crop.

There has been a marked increase this week in freight rates especially for Panamaxes, mid-size vessels that are often used to transport grain, notably on the transpacific route that carries grain from Latin America to China and the rest of Asia.

A metals broker disputed the view that the need for ore imports from China was behind the upturn, arguing that it could be due to producers storing certain commodities at sea while waiting for better prices.

Source: Transportweekly