China Offers Hope for Long Term Dry Bulk Market Growth

China Offers Hope for Long Term Dry Bulk Market Growth

October 20, 2020

China’s economic recovery raises hopes for a dry bulk market. And it fulfills the long-term vision. However, there are still many obstacles. Concerns also remain until full-blown freight rate resurgence. The Allied Shipbroking weekly report shows that China has played a vital role in the global bulk dry sea freight market for many years. Because it ranks second in the world in terms of GDP. It is also a major importer of iron ore and soybeans. Also, everyone realized this impressive role this year. Because after the Feb March period disaster, the country played a huge role in the return of goods in the dry bulk market.

Mr. Vamvakas believes that 2020 will be a disappointing year. But China is a little optimistic in this dark space. Meanwhile, the latest World Bank forecast looks optimistic. It says we expect economic growth to reach 7.9% in 2021. The latest data show that China’s manufacturing activity increased in September.

The PMI has risen to 51.5 last month. While in August it was 51.0. It is worth noting here that the PMI above 50 indicates expansion. He notes that iron ore imports rose in September. And it was 96.1 m tonnes. At the same time, the average monthly import for the year has reached 94.23 m tonnes. At the same time, steel production has increased. In this regard, its monthly production in August reached 94.5 m tonnes. He believes that a significant part of its production is stored. Allied’s analyst continued: “this begs the question as to how quickly this excess steel produced can be absorbed by either local demand or exports.

This undermines efforts for economic recovery. Because there is no balance between the production rebound and demand recovery. “Another key element that should not be overlooked is the ongoing trade tensions between with the US,” he adds. But this stopped with the pandemic. But now, with the US election approaching, we will see tensions resume.

Trump has repeatedly criticized China for its pandemic and trade policies. However, we expect the soybean trade to grow, at least. We are currently seeing a 1% increase in total soybean imports from China. In general, the ambiguity of the pandemic and the impact of the US election do not allow for safe steps in the market.

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