The cost of moving commodities like coal and iron-ore across the world’s oceans is surging as China lifts cargo purchases. Whether the rally will withstand the economic aftershocks of the coronavirus is a thornier question.
Rates for giant capesize ships climbed to almost $31 000 a day on Wednesday, almost certainly the highest for the time of year since 2009. The rally has been driven by an increase in cargo flows from Australia and Brazil, the two top iron ore producers, as easing lockdown measures saw Chinese steel mills increasing purchases.
“There is strong demand from China, with steel production up 5% year-on-year in June,” said Frode Morkedal, an analyst at Clarkson Securities, a unit of the world’s biggest shipbroker. “Port inventories of iron ore are relatively low, so steel mills and traders are replenishing stocks.”