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Iron Ore-Ship Returns Slide as Monthly Steel Production Falls

Charter rates for capesize vessels that haul steelmaking raw materials including iron ore and coal fell to a two-week low as November steel output declined.

Daily returns for capesize ships retreated 1.4 percent to $30,926, according to the Baltic Exchange in London today. That’s the third straight decline and the lowest since Dec 7, data from the exchange show.

Global steel production in November was the lowest this year, said Erik Nikolai Stavseth, an analyst at Oslo-based Arctic Securities. Two capesizes were booked for spot, or single-voyage, loadings of iron ore to China from Australia at rates between $11.20 to $11.25 a metric ton, Omar Nokta, an analyst at investment bank Dahlman Rose & Co., wrote in an e-mailed report today. That compares with $14.30 a ton yesterday.

“Given the macroeconomic headwinds and signs of European steel mills reducing production in 2012, we are not surprised by the decline,” said Stavseth. Lower production is an “obvious threat” to the dry bulk market, Stavseth said in the report.

Capesizes are the biggest vessels tracked by the Baltic Dry Index, a broader gauge of commodity-shipping rates, which fell 1.2 percent to 1,856.

Daily rents for panamax ships, the largest that can navigate the Panama Canal, declined 2.1 percent to $13,742. Supramaxes, about 25 percent smaller than the Panamax class, were little changed at $12,408. Handysize ships, the smallest tracked by the index, decreased 0.3 percent to $8,363.

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