Demand Uncertainties in Dry Bulk -
Iron ore and coal collectively account for more than half of seaborne dry bulk demand, heavily impacting the capesize and panamax markets in particular. Both of these commodities are subject to significant seaborne demand uncertainties, with important implications for the dry bulk freight market.
While strong seaborne iron ore supply growth is expected over the coming years, the impact on freight demand ultimately hinges on where higher-cost capacity is displaced (China vs the seaborne market). Meanwhile, the outlook for seaborne coal demand is plagued by numerous unknowns, with Chinese imports declining faster than many had anticipated and the trajectory of Indian import growth difficult to predict.
SGX Freight volume growth continues to build momentum. In Q1 2015, volumes totalled 36,584 contracts (+365% y/y), while year-to-date volumes are already 24% above the total volume cleared in 2014.
SGX provides a compelling value proposition in clearing freight contracts, with a market-wide incentive of US$4.50 per contract or even lower for some products (see exhibit 8 below), while margin offsets across our complementary product suite enable greater working capital efficiencies.
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Iron ore and coal collectively account for more than half of seaborne dry bulk demand, heavily impacting the capesize and panamax markets in particular. Both of these commodities are subject to significant seaborne demand uncertainties, with important implications for the dry bulk freight market.
While strong seaborne iron ore supply growth is expected over the coming years, the impact on freight demand ultimately hinges on where higher-cost capacity is displaced (China vs the seaborne market). Meanwhile, the outlook for seaborne coal demand is plagued by numerous unknowns, with Chinese imports declining faster than many had anticipated and the trajectory of Indian import growth difficult to predict.
SGX Freight volume growth continues to build momentum. In Q1 2015, volumes totalled 36,584 contracts (+365% y/y), while year-to-date volumes are already 24% above the total volume cleared in 2014.
SGX provides a compelling value proposition in clearing freight contracts, with a market-wide incentive of US$4.50 per contract or even lower for some products (see exhibit 8 below), while margin offsets across our complementary product suite enable greater working capital efficiencies.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchmy Like Us On Facebook : www.facebook.com/EpicResearchMalaysia Need Any Assistance Feel Free To Mail Us at : info@epicresearch.my
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