Ore Shipment Costs Will Gain Another 25%, Dahlman Rose Says

Hire costs of capesize ships that haul ore will rise 25 percent more as exports from Brazil to China drive a rebound that’s doubled rents since Aug. 17, according to Dahlman Rose & Co., a U.S. investment bank.

Daily costs for the commodity carriers climbed 9 percent to $23,899 a day, the highest since Dec. 20, according to the Baltic Exchange, a London-based provider of shipping costs on 29 dry-bulk routes. Daily rents for the commodity carriers will “soon” top $30,000 because of stronger volumes of commodities shipped from Brazil and Australia, Omar Nokta, the bank’s New York-based shipping analyst, said by e-mail today.

“Over the short-term, firm Asian steel markets should keep supporting capesize rates,” Nokta said in the e-mail.

Rents for capesize vessels have doubled since Aug. 17 when Nokta forecast rents would advance to last year’s average level of $33,000 a day within “several weeks.”

The global steel industry is the single most important influence in dry-bulk shipping, with ore, coking coal and steel products accounting for 51 percent of seaborne trade, estimated at 3.56 billion metric tons for 2011, according to DVB Bank SE, a German transportation lender.

The Baltic Dry Index, a broader measure of commodity shipping costs, advanced 3.5 percent to 1,740 points, the highest since Dec. 24.

40% of Capacity

The 1,267 capesize ships comprise 40 percent of capacity of the dry-bulk fleet of 8,603 bulkers, according to data from Clarkson Research Services, a unit of the world’s largest shipbroker.

The fleet faces a glut that’s depressed the index to average quarterly levels last seen in 2008, after too many new vessels were ordered when rates boomed, Bank of America Merrill Lynch said in a report Aug. 1. Demand is unlikely to catch up with supply until 2014, it said.

Ore shipments on capesize vessels tracked by Clarkson reached the highest monthly tally for the year in August, data show. There were 76 vessels booked to ship ore, from 58 in July, and 71 in June, according to Clarkson.

Rents for panamax ships, the largest to transit the Panama Canal, rose 0.4 percent to $13,061, according the exchange. Hire costs for supramax vessels about 25 percent smaller, were down 0.1 percent at $14,415. Handysize ships, the smallest tracked by the index, were 0.1 percent lower at $9,945 a day.

Some 70 percent of forecast exports of 1 billion tons of iron ore in 2011 will be shipped from Brazil and Australia, according to Clarkson. Dry-bulk vessels handle 39 percent of world trade, according to a July presentation by Genco Shipping & Trading Ltd.

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