Friday Big Picture Report
Updating Our Forecast
Still on track
We have just completed the latest update to our supply, demand and rate forecasts. Despite the near term economic picture looking slightly more challenging than it was a few months ago, our overall view on the longer term cycle remains on track. As usual, we provide an update on some of the key trends here, but if you want the full details, please speak to your broking contacts.May 18th
Queensland Port Congestion
After the storm
Cyclone Debbie made landfall in Queensland, Australia on March 28th, hitting the region’s coal mines and transport infrastructure. As a result, shipments from the world’s largest high quality coking coal region were severely disrupted. Via our monitoring of port congestion, we recorded a surge in the number of vessels waiting at anchor in the major Australian coking coal ports in recent weeks, having a knock-on effect on the market as a whole. As operations start to return to normal, we assess the initial impact and lasting effects on the market.May 11th
Policy Impacts on Freight
Chinese economic policy is not all positive
Having reviewed some of the positive long-term economic and trade forecasts last week we take a look at the more immediate drivers of demand coming from China. This is timely given the way the freight market has been trending downwards and fears that the recovery over the past twelve months has been overdone. So do China’s macroeconomics still support the positive outlook for dry bulk we have been championing?
A number of major organisations have recently released updated forecasts for some of the key drivers for dry bulk freight. Not only is the overall growth trend positive, but in several cases growth forecasts have been revised upwards, indicating a degree of momentum behind the direction of the global economy and the demand side for shipping. So this week we present you key trends highlighted in some the economic reports we have been following. We’ve done the reading so you don’t have to…April 27th
Iron Ore Price
Forecasting Iron Ore Prices – Is it really a lottery?
One of the most difficult games in town at the moment is attempting to forecast the short-medium term price of iron ore. Being the key commodity for cape employment by some considerable margin, the price of iron ore can have a major impact on the cape market.
Scrappy go lucky
Shipping rates and scrapping volumes in the dry sector are closely linked. We review some of the key recent trends.
Q1 Review-Freight Fundamentals
A quarter to remember
Having started the year at a fairly positive level, rates took a tumble through Chinese New Year before racing ahead through to the end of March. Since then things have taken a bit of a step back, as have broader commodity prices overall, but sentiment in the market remains strong. Below we review some of the key drivers that have contributed to how the market has performed in Q1 and that will influence its path over the next few months.
Shipping Market Cycles
Timing and Magnitude
A popular chart these days draws a dot for each shipping sector at some point along a curved line representing the peaks and trough of a hypothetical shipping cycle. Some sectors will be on the way down this visual ‘wave’, or at its nadir; others will be on the way back up, or at its peak. In its simplicity alone it is a thing of beauty. Unfortunately it is unlikely to be more than a reflection of a sector’s recent performance relative to historical averages. It says nothing about the length or magnitude of each sector’s shipping cycle. But is there a way of saying something that might actually be useful to a sector-agnostic investor without complicating the picture?
Economic Growth in the Philippines
Small Island, big imports
The economy of the Philippines grew by an impressive 6.8% in 2016 and is off to a strong start for 2017. More impressive still is how this has driven the country’s dry cargo imports, which accounted for 26% of all intra-Asian trade growth last year. Coal imports in particular grew by 75% year on year, warranting a closer look into how shipping patterns have been affected and what future growth might look like.March 23rd
Our Market Outlook
Improving sentiment, supportive fundamentals
We recently updated our supply-demand model and while our overall forecast has only changed slightly, we are becoming increasing confident in the outcome we have been consistently flagging for the last 12 months.March 16th
Having been seen by some as too positive a year ago, we now see the risk as being that sentiment will over- take the underlying fundamentals. For while we remain positive on the market outlook, we caution that there are significant risks and that these are predominantly focussed on the downside.
Event Impact Analysis
- Colombia’s coal output up 3% in Q1 May 23rd
- China’s April coal production up 10% on year May 23rd
- Adani investment decision on new mine delayed May 23rd
- Chinese steelmakers double scrap use over past two months May 23rd
- Argentina export first iron ore cargo in 2017 May 23rd
- China’s iron ore port stocks at another new record high May 23rd
- Iranian steel producers starts exporting billet to UAE, with pig iron exports to Europe to come May 16th
- New Filipino environment minister aims to balance environment and mining, following mine closures May 16th
- China suspends new coal-fired power plants in 29 provinces May 16th
- Adani to finalise investment decision for Australian project by June May 16th
Contact Braemar Research:
- [email protected]
- +44 (0)20 3142 4200