Freight-Swaps Trade Is Highest Since 2008 as China Spurs Rates

Trading in freight swaps rose to the highest since October 2008 as stronger Chinese demand for iron ore and slowing fleet growth spurred bets shipping prices will rally further, Freight Investor Services Ltd. said.

Shipping companies, banks and funds traded the equivalent of 50.3 million metric tons of cargo in the week ended Sept. 6, the largest volume since the five days through Oct. 17, 2008, the London-based derivatives broker said by e-mail today. In annual terms, transactions fell for four straight years after record-high orders for new ships caused rates to collapse.

The Baltic Dry Index (BDIY), a measure of commodity freight costs, surged 9.3 percent yesterday, the most since 2009, according to the Baltic Exchange, a London-based publisher of costs on more than 50 maritime routes. The increase was led by gains in rents for Capesize ships, the largest iron-ore carriers, which rose almost fivefold to $27,036 a day in the past three months.

“People have seen this sustained rally, and the order book isn’t as bad as it was,” Peter Norfolk, a London-based analyst at FIS, said by phone. “There’s a bit more optimism among some people.”

Volumes rose to the equivalent of a record 2.1 billion tons of cargo in 2008, Norfolk said. They slumped each year since, declining to about 910,000 tons in 2012, according to industry data compiled by FIS. Transactions come to 686,000 tons so far this year, the figures show.

The actual amount of dry-bulk cargo shipped this year will rise 5 percent to about 4.29 billion tons, according to Clarkson Plc (CKN), the world’s largest shipbroker.

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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