When inventory levels are low, importers may restock, which would encourage iron ore shipments. However, when inventory levels are high, importers are likely to postpone new orders.
Activity in the newbuild space is slowing down considerably, and faltering commodity demand in China is leading to negative sentiment toward the dry bulk shipping industry.
Auto sales in China fell by 2.3% year-over-year in June to 1.8 million vehicles. China’s Association of Automobile Manufacturers has also lowered its estimate for auto sales growth in 2015.
China’s final reading of the manufacturing purchasing managers’ index came in at 49.4. Factory activity in China has been below the 50 mark for the last four months.
If the orderbook level continues to fall more from this point and demand continues to grow, we could see some life in dry bulk shipping rates and equities.
