UBS AG said that the global seaborne trade for iron ore will expand by 12% this year, underpinning a recovery in bulk shipping rates.
Mr Richard Wei analyst said that trade for the steelmaking ingredient will rise to 1 billion tonnes this year, from 896 million tonnes a year ago. Mr Wei said that coking coal seaborne trade will jump 15% to 259 million tonnes, rebounding from a 6% decline last year.
Clarkson Research Services Ltd said that the Baltic Dry Index, a measure of commodity shipping costs has rallied 17% this year, as China boosted imports of raw materials to feed its steelmakers and power plants. Rates may drop as more new vessels are delivered, increasing supplies of ships.
Mr Wei said that profitability will improve in China’s dry bulk shipping companies and UBS raised its rating for the sector to neutral from negative on June 7. Still, the growing fleet means the sector will remain in consolidation.
He said that shipments of thermal coal, used in power stations, may rise 6% this year to 700 million tonnes. Global steel production is estimated to gain by 12% to 1.3 billion tonnes this year.