Cold War, Hot Freight Market?
A New Cold War, A New Hot Freight Market?
Like me you may have read many recent articles about the evolving Cold War between the US and China. Opinions vary (of course) and run along a spectrum from ‘No it isn’t’ denial to a nostalgic ‘It isn’t as existential as US-USSR Cold War 1.0’ to a political-economic ‘This is about mutually exclusive values‘ to an outright forecast of ‘The Coming War on China’ – title of a popular independent TV documentary made five years ago by a veteran UK news reporter John Pilger.
The Sino-American political relationship affects their friends and allies in unwelcome and uncomfortable ways. Australia is America’s key ally in the Southern Pacific but it is China’s key supplier of iron ore and a leading supplier of coal. Upset by Australia’s insistence on an inquiry into the origins of Covid19, China has sanctioned Australian agricultural exports but not its mineral exports. Australian miners are making hay as China ramps up steel production and Brazil’s exports are hampered by the coronavirus pandemic. BHP has announced a 4% rise in annual production to 281 Mn T as spot iron ore prices rise above USD 100 per tonne. You’ve seen the positive effects on the Baltic Dry Index in 2Q2020 – which is pretty much what I predicted in our own Dry Cargo Outlook published in March this year.
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