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Arch Coal Inc. Message Board

  • the_last_of_the_rea1ists the_last_of_the_rea1ists Jan 22, 2014 9:38 PM Flag

    Analyst for shipping industry predicts strong demand for Iron Ore and Coal from China


    Analyst making a case for the shipping industry, also provided strong support for the coal industry.

    China has established itself as the manufacturing base of the world, just by sheer volume. It accounts for the lion's share of global trade for nearly every commodity important to the dry cargo shipping industry, which means as China's demand goes, the seaborne shipping industry goes. China accounts for 70% of all iron ore maritime shipping, 47% of coal's, 44% of lead's, 42% of copper's, 41% of zinc's, and 36% of nickel's. These commodities comprise a bulk of all dry cargo shipping. Iron ore is the largest form of dry cargo shipped, accounting for 25% of all maritime shipping alone, followed by coal.

    Chinese demand for iron ore alone is large enough to substantially affect the BDI, and it's unlikely a substantial rise or fall in demand for iron ore will occur without correlated moves in the other major raw material commodities (for example, coal is often used as an energy source in the process of turning iron ore into steel; therefore, increased iron ore demand should increase pressure on coal demand. To illustrate, we can see on the right that coal imports have risen relatively unabated since 2006, in tandem with iron ore imports, the latter shown further below. Again, these two commodities are the two most common freights by volume for dry maritime shipping, and therefore the two most important).

    Sentiment: Strong Buy

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