Iron Ore Ship Rates Extend Slump as Fleets Offsets China Demand

Rates to ship iron ore fell for a fifth day as the glut of vessels offset demand for imports to China, the largest buyer of the raw material used to make steel.

Daily earnings for Capesizes carrying 160,000 metric tons fell 4.5 percent to $5,469, the lowest since May 2, according to the Baltic Exchange, the London-based publisher of shipping costs. That led the Baltic Dry Index, a broader gauge of commodities freight rates, down 1.3 percent to 861.

Rates retreated 13 percent from an almost three-month high on May 8. The global fleet swelled 80 percent since 2008 after owners ordered too many ships when earnings were 40 times higher than today, according to data from IHS Fairplay, a Redhill, England-based research company. Five vessels were booked to carry iron ore to China, including two from Brazil, according to Sam Margolin, a New York-based analyst at Cowen Securities LLC.

“Capes continue to dip despite decent volumes,” Margolin said in an e-mailed report today.

Panamaxes carrying about half as much cargo as Capesizes fell 1.5 percent to $7,771 a day, according to the exchange. Rates for the two smallest vessel types tracked by the index both changed less than 1 percent. Supramaxes fell to $8,931 a day, and Handysizes rose to $8,191 a day, data show.

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