Recovery riddle

ICAP is hopeful for a recovery in the capesize market after a disappointing second quarter.

After years of “fascinating peaks” and “desperate bottoms” for freight rates, researchers at the shipbroker believe supply growth is no longer a major concern.

Bigger concerns exist on the demand side, ICAP argues, noting a hue rise in Chinese iron ore production this year.

With iron ore prices falling by around $50 per tonne this year, however, Chinese production will reduce as early as 2015, ICAP said in its latest monthly report.

Further, large increases in global iron ore production capacity almost secures further falls in the cost of the commodity in 2015, ICAP says.

“This can only be a good thing for our market,” the report concluded.

Capesize rates sat at around $14,800 per day on Tuesday following a third day of progress.