Peak Oil News and Message Boards

pstarr wrote:The BDI suggests world manufacturing demand is down compared to reasonable expectations made several years ago.

The weakness in Capesize rate reflects a poor supply and demand balance for Capesize vessels. Largely, analysts and shipping experts have attributed this weakness to the Chinese New Year holiday, when manufacturing activity slows down. Naturally, there’s less business for commodity exporters.

But the problem isn’t just weakness in commodity demand. As mining firms in Australia and Brazil face heavy rains and storms, mining activity and port activities can grind to a halt. Tighter export rules in Colombia and restrictions in ore exports from Indonesia didn’t help either, although these are expected to be just temporary issues, while Indonesia’s export ban’s negative impact on the minor bulk trade could linger. As a result, rates have fallen more than just seasonality demands.

At 906, the Baltic Dry Index slumped to 12-month lows showing absolutely no signs whatsoever of the Q2 renaissance in global growth that has been heralded by all the highly-paid meteoroconomists.

Freight rates for capesize bulk carriers could drift lower next week as Brazil's Samarco iron ore mine disaster and uncertain ore demand from China weigh on cargo volumes, brokers said.

That comes as capesize charter rates from Brazil to China on Wednesday hit their lowest level since December 2008.

"I'm afraid things could get even worse in the short term," said Ralph Leszczynski, head of research in Singapore at ship broking house Banchero Costa (Bancosta).

"Sentiment about Chinese demand, by far the largest importer of iron ore, is just terrible at the moment," he said.

The disaster at the BHP Billiton Samarco iron ore mine on Nov. 5, where dams holding back waste material collapsed flooding two states and killing at least 11 people, could reduce Brazilian iron ore exports, brokers said.

"About 3.5 million tonnes may be cut from iron ore exports in December (as a result of the disaster)," said a Singapore-based capesize ship broker.

Ships that were chartered to load cargo had their fixtures cancelled and have flooded back into the market, worsening the ship supply glut, the Singapore broker said.

"The capesize market is not looking pretty at all," he added.

"Any shortfall in exports from Brazil to Asia is likely to be met by increased exports by Australian iron ore producers such as Rio Tinto and BHP Billiton rather than other South American or Scandinavian miners," said Konstantinos Papazoglou, research analyst at Bancosta.

"This will reduce tonne-mile demand, creating more shipping capacity, putting more pressure on freight rates."

dolanbaker wrote:I suspect that it is more to do with overbuilding infrastructure (too many ships) during the boom times and now we have more than enough to go around.

They are all available for use and vying for trade!

dolanbaker wrote:I suspect that it is more to do with overbuilding infrastructure (too many ships) during the boom times and now we have more than enough to go around.

They are all available for use and vying for trade!