SIMIC

By increasing its supply of grains, metals and other commodities, China is boosting its industrial bulk shipping companies as Beijing expects a new wave of supply-chain disruptions from rising Covid infections among Western trading partners, said the report.

China makes roughly 40 per cent of the dry-bulk shipping market and is the world's biggest commodity importer.

The country's overall imports were up 13.2 per cent in September compared to 2019, with shipping executives expecting an increase in freight rates over the next year.

The growth comes despite the tariff dispute with the US and growing tensions with Australia. Beijing has slapped duties on Australian beef and barley exports and has been taking in fewer shipments of coal.

"China will push on with its stimulus efforts into next year and this will support dry-bulk rates. If the world doesn't shut down again, there will be a global net restocking, which means more shipments," said BIMCO analyst Peter Sand.

The spot rate for capsize ships has dipped to US$18,000 from $35,000 in the middle of October after a dozen cargoes of Australian coal for China were cancelled.

Shipping executives and brokers expect the demand for dry-bulk ships to grow by three per cent over the next five years.

"We believe Brazilian iron ore production and Chinese iron ore consumption remain key drivers of the segment," said Jefferies Financial Group Inc.

Brazil's Vale SA produced 207 million tonnes of iron ore in the year through August, with most of it being exported to Asia.

"China has been really looking for iron ore from wherever it can get it in the world in preparation for the five-year plan Beijing is due to begin in 2021," said senior managing editor for Asia-Pacific Shipping Pradeep Rajan.

Meanwhile, corn cargoes are also rising, while China's commitment to US corn purchases grew to around 10 million tonnes so far this year.

"There are a lot of grain cargoes to China. They are stocking up because the dollar is low, and fears of supply shortages related to Covid-induced logistical challenges," said chief executive of New York-based Karatzas Marine Advisors & Co Basil Karatzas.

"Despite the seasonal fall, freight rates should stay solid because of pent-up demand in China and restocking. If Covid doesn't engulf the world again, dry-bulk looks positive over the next six months," said head of research at Athens-based Allied Shipbroking George Lazaridis.