Ore-Ship Rates Decline Most in Six Weeks Amid China SpeculationRob Sheridan
Charter rates for Capesize ships, the biggest carriers of iron ore, fell the most in almost six weeks amid speculation of slowing imports to China, the world’s biggest buyer of the commodity.
Daily hire costs for Capesizes declined 3.1 percent to $5,725, figures from the London-based Baltic Exchange showed today. That’s the biggest drop since April 3, while rates stayed the lowest level since May 3, according to the exchange. Capesizes are the largest vessels tracked by the Baltic Dry Index, a broader measure of costs to transport minerals and grains by sea, which lost 0.8 percent to 872, the lowest level since May 1.
Chinese demand for iron ore has become “uncertain” as buying of the steel-making raw material has slowed, according to Peter Norfolk, a London-based analyst at shipping and commodity derivatives broker Freight Investor Services Ltd. Charterers need to book more ships to lift rates, amid the “ongoing fleet expansion through 2013,” according to a report from Cowen Securities LLC today.
“Iron-ore prices need to fall further before Capesize rates recover,” Norfolk said today by phone. Iron ore delivered to the Chinese port of Tianjin fell for a third session to $128.10 a dry ton, the lowest level since May 6, figures from the Steel Index Ltd. showed.
Still, growth in the dry bulk seaborne trade will continue its “slow but steady recovery,” Braemar Shipping Services said in its preliminary results for the year ending Feb. 28. Trade increased 4.4 percent last year compared with 4.3 percent in 2011, and this “improving trend will continue into 2013,” the London-based shipbroker said today.
The dry bulk carrier fleet will grow 8 percent in 2013, compared with 10 percent last year and a 13 percent growth rate in 2011, according to the Braemar report.
Among the three classes of smaller ships tracked by the exchange, Panamaxes, the biggest vessels to navigate the Panama Canal, lost 0.4 percent to $7,888. Supramaxes, about 25 percent smaller, slipped 0.5 percent to $8,959. Handysizes, the smallest ships in the index, climbed 0.4 percent today to $8,184, staying at the highest level since Aug. 1.