China’s speculative housing boom effects on Dry Bulk Shipping Market

Due to higher iron and steel prices pushed upward trend in capesize bulk carrier spot rates in the first quarter of 2016, dry bulk shipping should remain cautious on speculative housing boom in China and economic growth signals. It is obvious that China’s housing boom is more speculative than substantial. Mostly, housing boom and housing price gains in expensive high rise buildings in big cities. In order to lower the steel demand, China’s government would tighten the credits. Steel prices almost entirely government-driven instead of market-driven demand. Under performing loans in China are still a major economic risk. Furthermore, Chinese economy is not growing steadily with consumers demand. China’s heavy industries and ship building is another major problem. China’s socialist government might withdraw support for inefficient domestic miners that could trigger Brazilian and Australian iron ore imports. China’s coal imports also effects dry bulk shipping market. Coal imports is in long-term decline due to greater use of natural gas. Predicting that coal will continue to maintain a negative trend and so on dry bulk shipping. Chinese government’s agricultural policy is unclear. China has been the biggest consumer of surplus grain produced in the US and Europe. China’s government want to favor domestic grain production. In sum, all these factors in commodities markets effect freight rates. Dry bulk shipping market will soon find a proper equilibrium point for demand and supply.