Baltic Dry Index Jumps 36% in Two Weeks as China Boosts Iron Ore Shipments
By Alaric Nightingale - Aug 20, 2010 7:10 AM PT
bloomberg.com
Baltic Dry Index Jumps 36% in Two Weeks
Businessmen pass the Baltic Exchange in London. Photographer: Chris Ratcliffe/Bloomberg
The Baltic Dry Index, a measure of commodity shipping costs, had its biggest two-week gain in 14 months as Chinese iron ore buying extended a surge in charter rates for vessels that carry the steelmaking raw material.
The gauge jumped 4.2 percent today to 2,756 points, according to the London-based Baltic Exchange. It’s climbed 36 percent in the past two weeks, the largest fortnightly advance since June 2009. Charter rates for iron-ore carrying capesizes had the largest increase today, rising 8.9 percent to $34,913 a day.
Chinese steelmakers “are replenishing the stocks they destocked,” Amrita Sen, an analyst Barclays Capital in London, said by phone today. While inventories of iron ore at Chinese ports stand at a near-record 76.8 million metric tons, mills themselves “destocked massively” during the past several months, she said.
The Baltic Dry Index has now climbed 40 percent in August while capesize charter rates have more than doubled, according to the exchange. The rising demand is enabling owners to overcome the effects of a fleet that’s expanding at about twice the speed of seaborne trade in commodities.
As well as more iron ore deliveries, there are also extra coal cargoes and “more grain shipments taking place all around,” Sen said.
Rental rates for panamaxes that ship coal, iron ore and grains added 1.9 percent to $24,830 a day; supramaxes climbed 2.1 percent to $21,710; and handysizes strengthened 1.1 percent to $15,682, exchange data show.
Fleet Expansion
The carrying capacity of the dry-bulk fleet has expanded 14 percent to 500 million deadweight tons since August 2009, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. World seaborne trade in commodities will expand 7.6 percent this year, it estimated in a report late yesterday.
Ships’ running costs including crewing and repairs range from $5,008 for handysizes to $7,773 for capesizes, according to London-based Drewry Shipping Consultants Ltd. The estimates exclude finance costs.
A five-year-old capesize vessel costs $57.3 million, according to the exchange. Its freight rate assessments are based on carrying capacities of 172,000 deadweight tons for capesizes, 74,000 tons for panamaxes, 52,454 tons for supramaxes and 28,000 tons for handysizes.
Clarkson also lifted its 2010 forecast for seaborne trade in coking coal in yesterday’s report, citing strengthening Chinese demand.
Global seaborne trade in the steelmaking material will jump 19 percent to 255 million metric tons, Clarkson said. In July, it forecast 17 percent growth to 252 million tons.
To contact the reporter on this story: Alaric Nightingale in London at anightingal1@bloomberg.net. |
