Bulk Rates Soared, China is the Driving Force
Bulk rates soared in 2017 and landed at their highest level in three years this December. China has been the driving force, says BIMCO.
Bulk rates began to increase from June, and reach the highest level in three years in December with 1730 points on the Baltic Dry Index.
"Everything has really gone in the right direction in 2017," says Peter Sand, chief shipping analyst at shipping organization BIMCO.
"The critical factors have been China's increased iron ore imports in order to replace the country's own low-grade iron ore. There has also been increased coal imports despite the fact that restrictions on their own coal industry have been removed," he says, pointing to grain as another critical factor.
Bulk rates saw a recovery in 2017, while 2016 went through the worst bulk rates.
Source: Bloomberg News Terminal / Baltic Dry Index. 4/1/16-4/1/17
Next year, Bimco expects growth in demand to slow down, but it will still see growth of two to three percent while fleet growth will sit at one percent.
"We believe that iron ore will still drive the market as it has done for a few years, still led by China. This is the most important factor, but grains could also contribute with large volumes without large growth necessarily arising," says Peter Sand, Chief Shipping Analyst at BIMCO.
"This will create a 2018 market which is not vastly improved relative to the year before. But it is, however, an improvement," he says.
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