Iron-Ore Ship Rates Rise to 33-Month High as China Demand Surges

Charter rates for the largest iron ore-carrying ships reached a 33-month high on rebuilding of inventories in China, the world’s biggest importer of the steelmaking raw material.

Hire rates for Capesize vessels, each 1,000 feet long and able to haul at least 150,000 metric tons of cargo, rose 9.7 percent to $32,945 a day, according to the Baltic Exchange, the London-based publisher of shipping costs on global maritime routes. That was the highest since Nov. 24, 2010, data compiled by Bloomberg showed.

Declining iron-ore prices spurred restocking at Chinese steel mills, according to Marc Pauchet, a senior analyst at London-based ACM Shipping Group Plc. Ore shipments to China from Australia and Brazil, the world’s two biggest exporters, also increased as production expands, according to Danske Bank Markets. Capesize rents gained for a 23rd session in 24 today on the Brazil-to-China route.

“For shipowners, this is very positive,” said Rune Sand, an analyst at Carnegie SA in Oslo whose recommendations on the shares of shipping companies returned 18 percent in the past year. “Forward contract rates are also surging, meaning owners can lock in revenues at attractive rates now.”

Ore Prices

Iron ore delivered to the Chinese port of Tianjin dropped 2.2 percent today, the most in four weeks, to $131.10 a dry ton, according to data from The Steel Index Ltd., part of McGraw Hill Financial Inc. Prices fell 9.5 percent this year.

Iron ore stockpiles fell 1.8 percent to 70.4 million tons in the week ended Sept. 13 and are the lowest for the time of year since 2010, according to data from Beijing Antaike Information Development.

Australia’s Port Hedland, the world’s biggest bulk terminal, shipped 22.3 million tons of iron ore to China last month, 34 percent more than a year earlier, port data show. Brazilian exports of 31.2 million tons were the highest for the month in two years, according to government data.

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

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

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