China demand fuels freight rises
Nov 01 11:47
Dow
Rises in ocean freight rates in recent weeks suggest continuing strong demand from China for raw materials, according to an analysis by Macquarie Bank.
Macquarie's commodities analysts say an increase in seaborne iron ore and coal trade has seen a substantial upturn in chartering rates for capesize vessels.
Rates surged late in 2003 and into early 2004, peaking in January at more than $US100,000 ($134,000) a day before sliding mid-year to $US40,000 a day as demand from China slowed, Macquarie analysts wrote in a brief market review.
Following a strong upturn in business to China since mid-year, rates have risen to US$75,000 a day, they said, without specifying actual vessel tonnages.
"Freight rates are widely used as an up-to-date indicator of economic activity and the strength of the upturn in recent weeks provides strong support to the view that Chinese demand for raw materials remains solid despite the government's efforts to slow growth," they said.
The analysts also say they don't believe China's interest rate increase last week should be viewed as a serious negative for metals markets.
The rate rise is a signal that the Chinese economy is still growing too fast, as recent industrial production growth figures of about 16 per cent year-on-year suggest, they wrote.
"We remain believers in a soft landing for the Chinese economy and remain convinced that China will continue to contribute to an above-trend period of demand growth for metals and other commodities," they wrote. China is a major consumer of metals.
afr.com |
