Securities Times reported that turning point comes quietly. BDI waves a new round of rebound after sharply plunging in July and August. Unveiling iron ore contract negotiation is expected to drive BDI up further.
After bottoming at 2163 on September 24th, BDI jumped dramatically and was closed at 2766 on October 19th up nearly 28%.
The sharp increase captures public attention recently but in analysts eye the rebound is an inexorable law in the market. Mr Li Lei analysis of China Securities said "The following months are traditional busy season for dry bulk cargoes. Boosted by heating factor in winter, coal transportation will definitely spur shipping market."
Another reason for rising BDI should be iron ore. Global investment banks released a research report in this September that iron ore market would warm up step by step. They predicted a price increase in iron ore talk. As a result, iron ore import ramps up for bullish preview which triggered the main shipping type dry bulk cargo market rising too.
Considering China factor, BDI, to some extent depends on the China demand for iron ore. In fact while BDI is rising, China iron ore import soars too. Data shows that China has imported 469 million tonnes of iron ore from January to September surging 35.7%YoY. Especially in Sep, import price of iron ore touched USD 80 per tonne due to tumbling steel prices. However, the import volume surged by 64.67%YoY to 645.5 million tonnes.
Analyst viewed iron ore will be restocked up when big-three miners demand a 30% to 35% increase on 2010 contract price. It seems that big-three always know about Chinese iron ore demand even better than country government and are expert in making a big rally by their monopoly in iron ore industry. Therefore, BDI will fluctuate up amid iron ore gamble in this Q4 and next Q1.
Mr Xing Fuliang analyst of CRE securities said China economy will keep increasing in 2010 when real estate and newly commenced projects will lend a strong support to steel industry. He expected China's iron ore will not decline. But BDI will be hardly to spiral up as fundamental of global bulk cargo market will not change.
Not only domestic research institutes, but also overseas firms are also looking BDI up. JP Morgan predicts it will hover at 2000 to 3000 and probably leap up in the short term. Goldman Sachs also increases it’s attract ratings.
(Sourced from Securities Times)
