Ore-Ship Rates Gain as Cargo-Price Slump Seen Spurring PurchasesAlaric Nightingale
Iron-ore shipping costs had the longest streak of gains since September amid speculation that plunging prices for the steelmaking commodity are spurring demand for vessels.
Daily charter rates for Capesize ships that haul at least 150,000 metric tons climbed 8.1 percent to $6,156, according to figures from the Baltic Exchange in London today. That was the eight consecutive increase.
Ore with 62 percent iron content imported via the port of Tianjin in northeast China reached this year’s lowest level of $128.10 a dry ton on May 3, according to data from The Steel Index Ltd. The price climbed 1.5 percent to $130 today.
“Low iron-ore prices have spurred Chinese buying,” Dominic Meredith Hardy, an analyst at Galbraith’s Ltd., a London-based shipbroker, said by e-mail today. There was a “steady flow” of charters last week to ship Brazilian and Australian ore to China, which lifted Capesize rates from a “hugely suppressed level,” he said.
The vessels needed about $7,758 a day just to cover running costs in 2011 before paying for fuel, according to the most recent data from Moore Stephens LLP, a London-based accounting firm that tracks the shipping industry’s expenses. Capesize rates were the lowest since September as of April 24, figures compiled by Bloomberg showed.
Capesizes are the largest vessels in the Baltic Dry Index, a wider measure of commodity shipping costs that rose for a third session. The gauge added 1.3 percent to 889, according to the exchange.
Daily rates declined for two of the three types of smaller ships tracked by the bourse. Panamaxes, the largest vessels to navigate the Panama Canal, dropped 0.7 percent to $7,979 and Supramaxes that haul about 50,000 tons fell 0.3 percent to $9,137. Handysize ships, the smallest within the index, rose 0.1 percent to $8,055.