The iron ore inventory levels at Chinese ports can impact purchasing decisions. When the Chinese market (MCHI) rises, shipping stocks tend to rise as well.
The BDI (Baltic Dry Index) fell for 21 straight sessions to an all-time low of 498 on November 20. This is the lowest value since the BDI started recording in 1985.
China’s iron ore imports in September were the highest level of 2015 at 86.1 million tons. This was a rise of 1.7% year-over-year and 16.2% month-over-month.
The Baltic Dry Index has fallen 15.7% in the first 26 days of October. This is after a 1.2% fall in the month of September. Most of the fall is due to the Capesize rates decline.
For the first eight months of 2015, China’s coal imports have fallen by 31.4% YoY (year-over-year). In August, China imported a total of 17.5 million tons of coal—a decline of 17.7% month-over-month.
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.
Though the Baltic Dry Index has improved in the last two months, industry experts still believe that oversupply and weak demand growth will keep the BDI down for another year or so.
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.
The BDI (Baltic Dry Index) is a leading indicator for the bulk shipping industry. It rose for nine consecutive days to reach a level of 779 on June 19.
Perhaps as a sign of confidence that dry bulk shipping companies will do well, Soros Management increased its position in the industry during the fourth quarter of 2013.
