Planned maintenance of a domestic-coal railroad in China will likely boost demand and freight rates for ships delivering imported cargoes, according to Pareto Securities AS, an Oslo-based investment bank.
The Daqin Railway, which has shipping capacity of 290,000 metric tons a day, will undergo 25 days of maintenance until May 7, according to the China Coal Transport and Distribution Association. The commodity is mostly shipped on Capesize vessels carrying more than 150,000 metric tons of cargo each and Panamaxes about half the size.
“Capesizes and Panamaxes are likely to find some support in the near term,” Pareto analysts Jonas Advocaat Kraft and Eirik Haavaldsen said in an e-mailed note today. Still, the freight market is “soft” and the effect of the additional demand will be “relatively modest,” they said.