Shipping Rates Extend Slump Amid Speculation Cargoes to Decline

Commodity shipping rates slumped for a 15th day amid speculation the number of cargoes will decline in the next three months, further curbing what the vessels earn.

The Baltic Dry Index slid 3.1 percent to 720 points, a three-month low, according to the Baltic Exchange in London. The biggest decline was for Capesizes hauling more than 150,000 metric tons of iron ore, which plunged 10 percent to $5,032 a day, according to the bourse.

A glut of vessels and speculation that iron ore and coal cargoes will decline in the first quarter of 2013 are undermining owners’ confidence, said Steve Rodley, a managing partner at Global Maritime Investments Group, which operates ships and trades freight derivatives. The Capesize fleet’s capacity expanded 13 percent in the past year while trade in iron ore grew 6 percent, according to data from Clarkson Plc (CKN), the world’s largest shipbroker.

“People aren’t expecting much,” Rodley said by phone before the index was published. “The tone is definitely down. Sentiment is down. Everybody has been worrying about the first quarter for a long time and now it’s just around the corner.”

Brazil-to-China iron-ore shipping costs measured on a per- ton basis fell to $16.33, according to the Baltic Exchange. They slumped 8.6 percent to $7.01 a ton for Australia-to-China.

Day rates for Panamax vessels, the largest to navigate the Panama Canal, declined 3.5 percent to $6,069, according to the bourse. Supramaxes fell 0.04 percent to $7,714; Handysizes, the smallest vessel class tracked by the exchange, rose 0.02 percent to $6,556.

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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