Iron-Ore Ship Rates Reach Highest Since 2011 on Chinese Buying

Costs to transport iron ore on the biggest ships reached the highest quarterly average since 2011 amid speculation stronger Chinese demand for the steelmaking commodity is eroding a surplus of vessels.

Charter rates for Capesizes, each hauling at least 150,000 metric tons of cargo, averaged $18,968 a day in the third quarter, the highest since the final three months of 2011, according to data from the Baltic Exchange in London. Costs increased in the fourth quarter from the third in 11 of the prior 13 years, the bourse’s figures show.

China imported 13.6 million tons of Brazilian iron ore in August, a record for the time of year, customs data show. That route is the biggest source of vessel demand when multiplying cargoes by distances, even though Australia ships more of the commodity to the Asian country. Shipbrokers reported a further increase in charters this month, said Peter Norfolk, research director at Freight Investor Services Ltd., a London-based shipping-swaps brokerage.

“We saw large volumes of Chinese buying and restocking from both Australia and, more importantly, Brazil,” Norfolk said by phone today. “Brazil had previously struggled to improve its volumes, so that’s made a difference. I see demand holding up and the year could end strongly.”

Hire rates for Capesizes fell for a third session today, sliding 4.2 percent to $36,425 a day, according to the exchange. Fourth-quarter swaps that traders use to bet on or hedge future freight rates traded at $28,850 a day at about noon in London, according to prices from Clarkson Securities Ltd., a broker of the derivatives and a unit of the world’s largest shipbroker.

Australia and Brazil are the two biggest global iron-ore exporters, while China is the leading steel producer.

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