Tmcnet quoted analysts as saying that the two primary indicators of China's internal demand, iron ore and coal imports are likely to experience a slowdown in the near future which will depress the freshly reviving global economy and press down the Baltic Dry Index after entering the Q3.

Industrial watchers said, thus far numbers are indicating that China heated iron ore and coal imports have begun to show signs of a reversal. With the iron ore negotiations being conducted between China and other producers worldwide coming to a close late June speculative needs have significantly declined.

Data with China Iron and Steel Association show that, China actual iron ore import demand stood at a monthly 40 million tonnes. However, the monthly average import from January to May arrived at 48.4 million tonnes signaling that local producers' import necessities have weakened.

As for coal imports, they are losing their competitive edge in price as compared with domestically produced coal. The latest quotes said that the after tax CIF of Australian steam coal was CNY 700 almost CNY 100 higher than the CIF of local coal with the same heat rate arrived at Qinhuangdao Port.

Experts said that large coal traders have greatly cut their purchasing plans, so China coal imports will shrink MoM in July and August. Both of the two weakening indicators will drag down the BDI starting from the third quarter. BDI is a key gauge for the possible path of global commodity prices.

(Sourced from tmcnet.com)