- Baltic Dry Index is at 1450 points, 7% higher than the previous week.
- Stringent inspections in China is making generators purchase from foreign shores.
- Indian coal stocks fell to 11.1m tonnes, sufficient for just seven days’ generation.
- The rupee has increased from 70 to 72.65 versus the US dollar.
- With China grabbing soybean exports from Brazil, the Panamax rates are further influenced.
As the tight domestic Chinese coal supply spurs import demand and Indian buyers look to replenish stocks, the Panamax rates rised up. The Panamax dry vessel rates have risen 7.5% over the past week, with the Baltic Panamax Index (BPI reflects the 60,000-80,000 deadweight tonnage segment) reaching 1,639 points, only marginally below 28 August’s eight-month high of 1,643 points, writes Laurence Walker of Montel News.
The Baltic Dry Index, which tracks all dry bulk markets, was 7% higher on the week, at 1,450 points.
How is dry bulk segment faring?
Domestic shipments in China had been hampered by stringent inspections at the nation’s largest coal port of Qinhuangdao, said a dry bulk analyst with a large shipbroking firm.
“As a result, generators are having to buy more from other countries,” he said.
He noted that through the inspections – which largely focus on coal quality, including sulphur and ash content – the government was attempting to show producers, and the wider global market, that it was “on the ball” with regards to environmental issues.
Indian Coal Market Impact
Vessel rates were also buoyed by “devastating Indian coal market tightness”, said Hans Gunnar Nåvik, senior analyst with Oslo-based StormGeo Nena Analysis.
Stocks at 121 Indian coal-fired plants, monitored by the Central Electricity Authority, were seen last at 11.1m tonnes – which is sufficient for just seven days’ generation and the lowest level since December last year.
“It is likely that import demand is very strong, but due to the weak currency, India is turning to as much ‘bad coal’ as possible, meaning Indonesian low-calorific coal,” he said.
The Indian rupee was last seen at 72.65 versus the US dollar, compared with 70 a month ago and 66 at the same time last year, making dollar-linked coal less attractive for the country’s buyers.
“Increased coal demand from India supported the [panamax] market, with bad weather disrupting vessel schedules and enhancing rates further,” said shipbroker Allied in a note.
Trade war Impact
Analysts also attributed the rise in panamax rates to buoyant soybean exports from Brazil.
“The Brazilians are running down inventories, and the Chinese are just grabbing it,” said the first analyst, noting this was in place of US soybean purchases, which have been hampered by the ongoing trade war between the two countries.
China has placed 25% import tariff on US soybeans, in retaliation to president Donald Trump’s tariff hikes on Chinese goods.
“[East coast South America] is emerging as the main provider of business in the Atlantic,” said shipbroker Intermodal in a note.
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Source: Montel News
