Page 57: of Maritime Reporter Magazine (November 2003)

China number six in the world - grew by more than eight percent in the first half of the year. Forecasts for full-year GDP indi- cate growth of nine percent. Concern that the country's economy could be on a heading to overheat is a worry for the shipping industry because Chinese demand is the principal factor that is fueling the buoyant shipping markets.

Indeed, there appears to be no let-up in demand. Chinese requirements have underpinned the tanker market in recent months and. despite a temporary blip during July and first-half August as the market adjusted to large delivery vol- umes. rates have now recovered sub- stantially as charterers hurry to fix the limited supply of large, long-haul ton- nage that is still available.

Asia generally is of increasing impor- tance in the VLCC trades but cargoes bound for China are an important indi- vidual factor in this dynamic trade.

According to International Energy

Agency figures. Chinese oil demand hit 5.59m barrels a day (b/d) in July, up almost a fifth year on year. And. accord- ing to U.S. government figures. China will overtake Japan this year to become the world's second largest oil consumer.

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Demand for iron ore, meanwhile, is a key catalyst in the current dry bulk mar- ket boom. Chinese iron ore imports rose last year by a quarter, following a stag- gering rise of 32% in 2001. Reports from the Far East describe highly- stressed, over-worked but commission- happy Capesize brokers working round the clock to meet demands from the mainland. Spot Capesize rates are exceeding $30,000 a day on some routes but, brokers say, the is no mere tempo- rary blip - the market is expected to con- tinue its bull run for months yet. A

Capesize owner was recently overheard in a smart London hotel describing his six-month Capesize fixture at $26,000, while a modern 170,000 dwt unit was reported fixed for three years, at $23,500. Other owners are believed to be negotiating with Far Eastern builders to switch newbuilding contracts from tankers to bulkers.

According to Frontline vice president

Tor Olav Tr0im, speaking at the recent

Lehman Energy Conference, seven of the company's eight Suezmax OBOs are now working the dry bulk market which, he said, had reached historic highs.

Grain demand and China were the two principal reasons for the booming mar- ket. he said, pointing out that the one- year timecharter rate was sufficient to repay debts on the OBOs in just two years. Not only is China the principal fueling factor for the freight markets, it has been steadily muscling in on the shipbuilding sector recently too. Now, latest news is that China has become a source of competitively priced ship spares and, we are told. Hong Kong- based shipping companies are investing time and money to develop supply sources on the mainland. Other ship- builders have an eye on that market too: one such is Japanese builder Tsuneishi which has announced that it plans to source more parts in China. According to a company statement. Tsuneishi is constructing ships' components in China "to make our productivity more compet- itive". The shipyard is reported to have 97 ships on order, including 88 bulk car- riers in the 52,000 - 82,000 dwt range and eight Aframax tankers.

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