Seaborne Iron Ore Demand to Rise 12% in 2010, Boosting Shipping, UBS Says

The global seaborne trade for iron ore will expand by 12 percent this year, underpinning a recovery in bulk shipping rates, UBS AG said.

Trade for the steelmaking ingredient will rise to 1 billion metric tons this year, from 896 million tons a year ago, analyst Richard Wei said today at a briefing in Beijing. Coking coal seaborne trade will jump 15 percent to 259 million tons, rebounding from a 6 percent decline last year, Wei said.

The Baltic Dry Index, a measure of commodity shipping costs, has rallied 17 percent this year, as China boosted imports of raw materials to feed its steelmakers and power plants. Rates may drop as more new vessels are delivered, increasing supplies of ships, Clarkson Research Services Ltd. said June 1.

Profitability will improve in China’s dry-bulk shipping companies and UBS raised its rating for the sector to “neutral” from “negative” on June 7, Wei said. Still, the growing fleet means the sector will remain in “consolidation,” he said.

Shipments of thermal coal, used in power stations, may rise 6 percent this year to 700 million tons, he said. Global steel production is estimated to gain by 12 percent to 1.3 billion tons this year, he said.

--Feiwen Rong. Editor: Tan Hwee Ann

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at +86-10-6649-7563 or frong2@bloomberg.net

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