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Shipping Rally Seen Curbed by Clarkson as Owners Compete for Ore

Shipping rates for hauling iron ore, which more than doubled this month, may be poised to snap the rally as competition intensifies to load cargoes from Brazil, said Clarkson Plc (CKN), the world’s largest shipbroker.

Rates for Capesizes moving about 160,000 metric tons of the raw material jumped to $18,388 a day yesterday from $8,039 on Sept. 28, according to data from the London-based Baltic Exchange, a publisher of costs on more than 50 maritime routes. The price was the highest since January.

The advance may spur more owners with ships in the Atlantic Ocean to compete to take Brazilian ore to Asia, causing the rally to reverse over the next several days, Guy Campbell, managing director of dry cargo at Clarkson, said by phone today. The “jury’s out” on what will happen after that, he said. Extra iron ore from Australia, West Africa and the South American country caused the rates to increase, he said.

“Generally, the extra iron-ore demand will continue to December, but in the short term, for the next week or so, we think rates will look toppy,” Campbell said. Owners who had previously preferred to keep ships in the Atlantic may seek charters for them now because rates sometimes decline in the first quarter, he said. The quickest round-trip between Brazil and China takes about 76 days, according to sea-distances.com, an online voyage-durations calculator.

Contracts that traders use to bet on, or hedge, the Baltic Exchange’s daily price assessments declined. November forward freight agreements fell 7.5 percent to $18,625 a day, according to data from Clarkson’s securities unit.

Extra Australian cargoes caused more ships to sail to the country and not to the Atlantic, Campbell said. That meant fewer were available to load Brazilian ore at a time when its cargo numbers were expanding, he said.

To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net

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