China's anti-pollution measures largely hitting the domestic iron ore markets, benefiting seaborne markets.
 |
| Seanergy's Squireship among the capesizes benefiting from Brazil iron ore cargoes. Photo: Seanergy |
The Baltic Exchange reports 26 ore-specific capesize fixtures on the Brazil-to-China route this month, up from 21 in October. The level of demand is roughly flat year-on-year as Brazil ore cargoes totaled 28 during November 2016.
But rates are markedly improved with the Brazil-to-China route fetching just over $19 per tonne, the highest level since November 2014.
Among owners reaping the cargo harvest, Safe Bulkers fixed the 176,006-DWT Pelopidas (built 2011) to Cargill at $19 per tonne. Seanergy fixed the 170,000-dwt Squireship (built 2010) to Oldendorff at current market levels.
Safe Bulkers said on its last earnings call that iron ore imports were expected to rise 5% this year. But Chinese seaborne iron ore imports have risen 7% year-on-year through September to just over 804 million tonnes, according to Stifel.
Safe Bulkers chief executive Polys Hajioannou said on the call that China is surpassing expectations in the market currently.
"All exports and imports in China increased and maintained strong growth," he said. "It even surprised us how strong the market was in the third quarter. This is continuing now in the fourth quarter."
There had been concerns that iron ore imports would slow due to China's moves to curb pollution in major cities. MSI analyst Will Tooth notes that steel production in China took a dip, but it is mostly coming from the older, less efficient mills.
He says the anti-pollution measures hit the lower quality iron ore coming from domestic mines, while Brazil's higher quality ore remains in demand.
"Imports are still pretty high," Tooth said. "There's a slowdown in regions that are taking in the domestic ore."
source: www.tradewinds.com