Iron-ore shipping costs extended a surge as demand accelerated to move the commodity from Australia and Brazil, the two largest supplier nations.
Rates for Capesize ships hauling 150,000 metric tons or more of the commodity jumped 16 percent to $33,475 a day, according to data from the Baltic Exchange, a London-based publisher of freight costs on more than 50 maritime routes. Swaps that traders use to bet on, or hedge, that same price jumped 11 percent, according to data from SSY Futures Ltd., a London-based broker of the contracts.
Record construction of ships over the past several years to transport commodities is starting to slow. The fleet’s combined transportation capacity expanded 6 percent this year, the least since 2009, according to data compiled by Bloomberg from IHS Maritime, a Coulsdon, England-based research company. Trade in iron ore, the main Capesize cargo, will grow about 7 percent this year and next, according to Clarkson Plc, the world’s largest shipbroker.
“It’s competition between the two supply centers: Brazil as well as Australia,” Alex Gray, the London-based chief executive officer of Clarkson’s derivatives business, said by phone. “Everyone this morning was well aware that the physical market was a lot stronger” and that caused swaps to gain.
Forward freight agreements traded at about $30,000 a day compared with a closing price of about $27,000, according to SSY Futures, a unit of Simpson, Spence & Young Ltd.
Australia is the largest iron ore exporter followed by Brazil. China buys about 65 percent of all seaborne cargoes.
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