China seen as key for iron ore, shipping firms

China will remain the world's key iron ore market for mining companies and the global dry bulk shipping industry, despite concerns about the future of the country's infrastructure boom and an easing of foreign direct investment, shipping experts say.

'Fundamentally, I am bullish about China,' Ragu Raghunath, Noble Chartering senior executive vice-president, told a Hong Kong Shipowners Association meeting on Friday.

His views were echoed by Paul Cao Baoshu, a shipbroker with Arrow Asia, who pointed out that while mainland gross domestic product growth slowed in the third quarter to 9.1 per cent, generally growth had been 'very good' this year. And, Cao said, while the mainland's steel industry had started to see a slowdown, with price cuts and a reduction in capacity, Beijing would probably unveil a mini-stimulus plan next year.

Cao said mainland authorities would be keen to maintain social stability ahead of a possible government reshuffle and the annual meetings of the National People's Congress and the Chinese People's Political Consultative Conference.

He added that this would follow concern that fiscal measures to rein in the property market might have been too tough, and that the appreciating yuan had been deterring foreign investment.

Pointing to the shipping sector, Raghunath said that 2012 and 2013 would see a large influx of new dry cargo Capesize ships, typically above 180,000 deadweight tonnes (dwt), which haul iron ore and coal.

Clarksons, the British shipbroking house, estimated that there were 493 dry cargo Capesize ships, totalling 97.8 million dwt, on order for delivery from now to 2014 and beyond. In tonnage terms this was equivalent to 41.1 per cent of the existing fleet. Next year alone Capesize ships totalling 51.2 million dwt were due for delivery.