China has been fuelling a dry bulk boom as it confidently bounces back from the coronavirus pandemic. 

Rewind to February 2020 and the global economy was facing a steep decline. Factory production in China collapsed at the start of the pandemic and Covid-19 cases were beginning to crop up all over Europe. 

But China, which is the world’s biggest commodity importer, is now ramping up investment in industrial production to propel economic growth. Consumer demand in Western economies, meanwhile, is also bouncing back as lockdowns are slowly lifted. 

The recovery has prompted a surge in imports of metals, grain, and other commodities to the East Asia nation. The Baltic Dry Index, which tracks the cost of moving commodities by sea, hit a lofty 3,240 on Monday. 

MarineTraffic analysis shows that 32,000 bulkers have called on China’s ports in the last six months, at an average of just over 180 a day. In addition, more than 370 Bulkers have arrived in China from Australia in April alone. January has been the busiest month of 2021 so far with 5,958 arrivals. 

Data released last week also showed imports grew 43 per cent in April year on year – but that was partly due to a low base last year when the pandemic hit global trade. 

Hamish Norton, president of Star Bulk Carriers Corp, is confident the tide won’t turn any time soon. “China and other economies that import dry bulk are strengthening fast,” he told the Wall Street Journal.  

“Iron, coal, grains, everything moves well at the same time. There is no area of slack. I’m pretty optimistic for an extended period of margin strength.”

Rahul Kapoor, vice president and global head of commodity analytics and research, maritime and trade at IHS Markit, was speaking at Baltic Freight and Commodity Dry Bulk Forum last month. 

He suggested that commodity demand would remain firm in the medium term due to strength in the Chinese economy. 

“The headlines out of China have been fascinating,” he said. “In the midst of a global pandemic, China was setting commodity records and that has only continued. China is still the key driver and is likely to remain so for the foreseeable future.

Shipping industry returns have fared poorly over the last decade. We have seen bankruptcies and people leave the industry, but the difference today is that overcapacity has been reduced which is underpinning our view of the market.

Ian Roper, general manager of Shanghai Metals Market (SMM), agreed with Kapoor’s assessment.

Short term absolutely things do look very strong, but this is certainly not a commodity super cycle with the environmental trends we are seeing.

Corn is also in high demand. Prices climbed above $6.5 a bushel last month – the highest level in nearly eight years. China is stepping up its grain imports as the country seeks to replenish its pig farms after an outbreak of lethal African swine fever. 

However, the US predicts China will cut global corn purchases next year down to 15 million tons as it attempts to reduce reliance on foreign grains.

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