Commodore Research reports that thermal coal demand is picking up across the spectrum of China, Japan, and Korea due to peak demand season and ongoing drought in China. Grains trade is expected to remain ‘firm’ despite some pull back in a few weeks as ‘peak South American grain season comes to an end’.
Meanwhile, according to Hellenic Shipping News, Chinese iron ore imports jumped 11.6% year over year year to date as of the end of April based on Chinese customs data. This is far less than last year’s 42% jump, but apparently is enough to outstrip the growing supply of dry bulk vessels given the latest BDI spike shown below.
Still, if we look at BDI futures from Imarex, it looks like markets still expect a pull back in Q3 and onwards. The good news for companies like DryShips (DRYS) or Eagle Bulk (EGLE) is that even the lower BDI levels expected by the futures market are still historically pretty decent. Just keep in mind futures trades are frequently very wrong.
Note: The author does not own securities related to DRYS opr EGLE, but investors he speaks or works with may.
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