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The
Baltic Dry Index, a measure of shipping costs
for commodities, fell to the lowest in more than
four months after data showed Chinese demand for
coal and iron ore to make steel is tumbling.
The
index tracking transport costs on international
trade routes slid 72 points, or 3.1 percent, to
2,246 points, according to the Baltic Exchange.
That’s the lowest since May 11. The gauge
crashed a record 92 percent last year as steel
demand and the world economy slumped. China
produced almost half the world’s steel last
month, according to the World Steel Association.
It’s the biggest consumer of iron ore, the
largest dry-bulk commodity hauled at sea.
“China’s in what we call ‘off-peak mode’ and not
going hell for leather importing iron ore,”
Hendrik Leusink, division executive for capesize
and panamax vessels at Island View Shipping in
Cape Town, said by phone today. Also, “there are
so many more ships coming free” for rental while
new vessels are being delivered.
Chinese iron-ore imports fell 14 percent in
August from July and coal imports slid 15
percent, a second consecutive monthly decline,
according to customs data today. The drops were
due to rising global costs and domestic
supplies. That’s even as the government spends 4
trillion yuan ($586 billion) on infrastructure
and other projects to boost the economy,
potentially driving raw-material demand. China
imported record levels of the commodities
earlier this year.
China has accelerated the pace of coal-mine
openings after completing safety checks and
consolidating as many as 10,000 pits that had an
annual capacity of 300,000 metric tons or less.
It’s the biggest producer and user of the fuel.
Iron ore will account for 28 percent of all
dry-bulk commodities hauled at sea this quarter,
according to forecasts from Drewry Shipping
Consultants Ltd. in London. Coal burned for
power will make up 18 percent and coal to make
steel will comprise 8 percent, the estimates
show.
Net growth of the dry-bulk fleet has quickened
to between 8 percent and 9 percent in the past
couple of months, compared with about 3 percent
in the first quarter, according to Oslo- based
specialist investment bank Fearnley Fonds ASA.
The portion of capesizes tied up in congestion
has dropped to 4 percent of the fleet from 14 to
15 percent earlier in the summer, Fearnley data
show. The vessels typically carry coal and iron
ore.
Rates to hire capesizes dived 8.8 percent to
$23,762 a day. They will average $22,900 during
the fourth quarter, according to forward freight
agreement data from Imarex NOS ASA at 3:03 p.m.
in Oslo. FFAs are used to bet on or hedge
against future dry-bulk freight rates.
Daily rents for smaller panamaxes that compete
for iron-ore and coal cargoes and also haul
grains shed 1.3 percent to $20,337. They will
average $16,900 in the last three months of
2009, the FFA data showed.
Source: Alistair Holloway, Bloomberg
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