Baltic Dry index drops as port traffic eases

LONDON—The Baltic Dry index, a measure of shipping costs for commodities, declined to its lowest in more than two months as vessel queues eased at Chinese ports.

Vessel congestion in China worsened as steelmakers and investors built iron ore stockpiles that reached a record of at least 79.2 million tons this year. That prompted the China Iron and Steel Association to call on June 19 for slower imports, warning of worsening loading delays and “huge” economic losses.

There’s “falling congestion in China,” Chris Tomlinson, a London-based analyst at Thurlestone Shipping Ltd., said in an interview Friday. “That’s put more ships into the Pacific and weakened” the market.

The Baltic Dry index fell 71 points, or 0.8 percent, to 8,854 points, according to the Baltic Exchange in London. That’s the lowest since April 22. The index slid 7.8 percent this week.

China iron ore imports from Australia may gather speed after producer BHP Billiton Ltd. won a price increase of as much as 97 percent from Baosteel Group Corp., China’s biggest steelmaker. The deal matches an agreement reached earlier with Rio Tinto Group and effectively ends a standoff over prices that was originally planned to be settled before April 1.

Rio and BHP had been pushing for a freight premium for Australian iron ore because it costs less to ship than supplies from Brazil, home to Cia. Vale do Rio Doce, the world’s biggest producer. During the pricing impasse, Chinese steelmakers increased purchases of Brazilian iron ore.

Rates to hire capesize vessels, typical iron ore carriers capable of hauling 160,000 to 180,000 metric tons of goods, retreated 0.7 percent Friday to $145,579 a day, Baltic Exchange data showed. Panamax vessels used to haul about 70,000 tons of grains fell 0.7 percent to $71,838 a day.

Investors expect rates to rise.

Forward freight agreements, financial instruments used to bet on future commodity-shipping prices, advanced. Capesize contracts for July to September climbed 4.4 percent to $158,125 a day, prices from Oslo-based broker Imarex NOS ASA showed. Panamax contracts during the period rose 4.2 percent to $74,000 a day. (Bloomberg)

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Baltic Dry index drops as port traffic eases

LONDON—The Baltic Dry index, a measure of shipping costs for commodities, declined to its lowest in more than two months as vessel queues eased at Chinese ports.