China scrambles for iron imports

[ASusilovic]

China’s steel industry has been hit with sharply higher spot prices for iron ore as mills scramble for imports ahead of expected import curbs linked to an inquiry involving spying charges against Rio Tinto, the Anglo-Australian miner.

Steel Business Briefing, the consultancy in Shanghai, said this week’s surge in Indian iron ore prices, which have risen by as much as $8 a tonne to almost $90 a tonne, was triggered by supply constraints as Australian miners halt spot shipments to China, while Chinese mills rush to buy amid reports that as many as 20 iron ore import licences will be cancelled. “Some traders point to congestion at Indian ports for the increase. But most believe the key reason is that Rio and BHP Billiton have stopped putting spot shipments up for bid, with volume falling off since the start of July,” the consultancy wrote. It quoted one Shanghai-based trader as saying: “There’s almost nothing coming from Australia at the moment.” Mills are increasingly nervous about what Beijing says is an effort to crack down on corruption in the steel industry.

http://ftalphaville.ft.com/blog/2009/07/15/62011/china-scrambles-for-iron-imports/

Somehow this stuff needs to be shipped to China, or ?

Watch this :

http://www.bloomberg.com/apps/cbuilder?ticker1=BDIY:IND

 

[number22]

Keep your eye on DRYS, China possibly shifts its import from Rio Tinto to Brazil's Companhia Vale do Rio Doce. Rio is screwed this time, no matter how hysterically Australia can be this time.

 

[poyayan]

If shifting import is that easy, it will be done years ago. My bet is on the Aussie.

Should have take the 33% deal.

http://www.bloomberg.com/apps/news?pid=20601086&sid=a9s.9jXgmNP4

 

[Illum]

Someone has been buying X. Everyday all day, twice on sunday. Wonder who it is?

 

[number22]

Quote from poyayan:

If shifting import is that easy, it will be done years ago. My bet is on the Aussie.

I think(speculate) Chinese can squeeze 36% to 39% cut, anything above 40% is very unlikely.

The questions is who want to be the handler of US debts if Chinese unloads, I don't see any so far this year, only Chinese increased buying US debts, although most are short term.

 

[MohdSalleh]

china is like a big monster eating up the whole world

 

[matgallis]

do they really need more ore??? Supply glut china!

 

[number22]

Quote from matgallis:

do they really need more ore??? Supply glut china!

Chinese has a very outdated system to import iron ore, a group of importers were acting as iron ore producer agents in China, using public funds speculating iron ore price, to these groups of middle man, higher price will help their personal gains.

Anyway, crackdown on these people in China is coming soon.

 

[subban]

Quote from number22:

Keep your eye on DRYS, China possibly shifts its import from Rio Tinto to Brazil's Companhia Vale do Rio Doce. Rio is screwed this time, no matter how hysterically Australia can be this time.

The problem with DRYS is that the stock is overdilluted. How many stock offerings have they done to cover covenant debt?

 

[number22]

Quote from subban:

The problem with DRYS is that the stock is overdilluted. How many stock offerings have they done to cover covenant debt?

Using DRYS etfs as a index for shipping industry, more specifically, or 2nd index comparing with Baltic Dry Index, give you a better senses where is shipping cost heading.

Check this out:http://www.reuters.com/article/marketsNews/idAFLV16271420090731?rpc=44

The Baltic's Capesize index .BACI dropped 3.58 percent on Friday, in a second day of falls, also reversing previous gains made earlier this week.

"There appeared a slowdown in Chinese imports from Australia, congestion unwinding at Chinese ports, newbuildings (new ships) coming out and with sufficient landed stocks and cargo still on the water, the market took on a softer tone," the Baltic Exchange report said.

The main sea freight index hit a more than eight-month high on June 3 of 4,291 but has been erratic since then.

Dry bulk shipping company DryShips Inc (DRYS.O) reported better-than-expected quarterly earnings this week, partly helped by a recent rise in spot charter rates.