In its latest weekly report, shipbroker Allied Shipbroking said that "we have been witnessing a strong movement in the coal market over the summer months something that has not only helped boost prices for the commodity compared to the levels that were being noted in late spring, but it has also rejuvenated a trade that during the past couple of years has been under what most would classify depressed market conditions. Being a vital commodity in the dry bulk space and the second most vital trade in terms of total seaborne volume traded".

According to the shipbroker, "given the recent price gains the price arbitrage being created between markets, we have also seen a healthy increase in tonne-miles of trade, as we start to see new routes being established and other routes that played a more minor role in the market up to now, starting to slowly take up center stage. In this space, the panamaxes and post-panamax sizes have been the ones to pick up the gains, while changes in the market such as the opening of the Panama canal has allowed areas such as the North-West coast of the U.S. and Canada to take a more competitive stance and help pick up any slack or arbitrage created from the side of supply", Allied said.

George Lazaridis, Head of Market Research & Asset Valuations, noted that "in part, we had already seen an increase in coal prices taking place in Europe which help drive some increased flow towards the continent. At the same time, the ramp in steel production that was being noted over the summer months in China had helped drive up prices and increase the flow of imports that was being seen. Being that most of the Far East had already increased its demand for higher quality coal, usually sourced from farther away locations and helping boost the overall demand for seaborne trade. Given that the increased demand that was being witnessed in the Far East has mainly been attributed to the expected partial closures in steel mills that are programmed by the Chinese government to take place in the coming winter months. This sparked a ramp up in production, in order to be able to create a strong stockpile of steel products so as to prevent any interruptions in supply. This may well prove to act as a dampener for the winter months as it may well cause a slower flow of iron ore and coal imports due to slower production levels, however this still depends on the level closures that will take place and will also depend heavily on the demand fundamentals for steel products during these next couple of months", he said.

According to Lazaridis, "while this has been going on and with demand showing healthy signs of growth, the supply of ships has been kept at fairly stable levels, with newbuilding deliveries having already slowed down considerably and with the schedule of newbuilding deliveries for the next couple of months set to be even fewer then what we were seeing for the first half of the year, we should see the growth of the fleet come to an almost complete stand still. This should help boost the demand supply balance further and provide the fertile ground for further freight rate hikes during the next couple of months. This all provides the strengthening in fundamentals that buyers have been waiting to see and it is with no surprise that interest in both the secondhand and newbuilding market has returned once more and been reflected in both the volume of transactions being reported as well as the prices being seen. It looks as though we are moving ever further into a firm recovery course and despite demand growth still being in a relatively fragile state compared to what we were seeing in the early part of the decade, it should have a life span well beyond the typical 2 year cycle we have been seeing over the past 10 years", he concluded.