Dry Bulk Market Expected to Rebound During 2021
The dry bulk market could move towards a new wave of demand for raw materials. Because we expect the global economy grows again after the pandemic. In its latest report, shipbroker Intermodal said:
“As we all know, China forges more steel than the rest of the world combined. During Covid-19, the nation will break a nine year record with iron ore imports increasing this year to above one bln tones.”
The outlook on the market price of iron ore is also strong. Because as a commodity it is now trading at the highest level since late 2011 up nearly 80% in 2020.
According to Mr. Christopher Whitty, Chinese iron ore imports are playing a significant role in the sea freight dynamics and the Capesize freight market in particular.
In the first and second quarter of the new year, we are all also hoping for effective vaccines to allow the global commerce to restart. Also it returns to a certain “new normal, hopefully boosting activity on an even more broader scope across all dry bulk segments”.
According to him, in the coal trade front, Australia and Indonesia account for 78% of the China’s total imports. Both countries offer short sailing distances to the China. Recent escalating political tensions between China and Australia have also led to an unofficial ban on its coal entering China.
Furthermore, they reported that China recently inked a US$1.5 bln worth of thermal coal deal with Indonesia. It represents a significant volume of the Indonesian coal expected to reach China within 2021.
Looking at iron ore demand, China’s demand is expected to remain high over the next 12 months. Although Chinese steelmakers may seek to reduce production slightly should the iron ore prices remain at such a high level. They expect the Iron ore demand in many other countries of the world stay below its 2019 level.
“China will release its “five year plan” for the period 2021-2025 in March next year. By that time, in March, we will have a more positive outlook on the Covid-19 situation. Let’s see how this will affect the sea freight in a new year where we are all expecting a much better landscape”, he concluded.
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