Ocean freight for dry commodities on major export routes rebounded more than 8 percent to a new high on Tuesday as roaring global trade driven by demand from China and India continued to keep the market on the boil.
The London Baltic Exchange's main price index, which monitors major trade routes for coal, iron ore, cement and soft commodities like grains and sugar, set yet another record at 9,082 points on Monday's close. This is up more than 9 percent from levels seen last week. The Baltic index has been setting new records daily since August 22 as port congestion and roaring global demand for raw materials boost freight rates.
Period charter rates for modern Panamax tonnages booked on trans-Pacific voyages were valued at around $80,000, up more than $6,000 from levels seen last week. And shipbrokers are expecting rates to possibly cross over the $90,000 mark before the end of the month.
"It's not impossible to predict that rates could hit $90,000 in the next two weeks, because you think once the Chinese comeback from Golden Week, there is going to be a lot of pent-up demand," a Singapore based shipbroker said. China will break for their mid-autumn holidays on October 1, and will return back sometime after October 7.
The Baltic Exchange's Panamax Index hit a fresh record on Monday at 9,386 points, up more than 9 percent from the previous week. The drive up in rates is coming from a strong push by the Chinese economy which has maintained exceptional momentum, growing by 10 percent or more per year since 2003.
China's surplus in 2006 hit a record $177.5 billion. In the first seven months of 2007 it rose 81 percent from the same period last year to $136.8 billion. "They are a massive country and I don't think their needs are even close to being met, so they will continue to have big appetites for raw materials, which is good for the freight market," a shipbroker said.
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