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LONDON—The Baltic Dry index, a measure of shipping costs
for commodities, had its first decline in five days with
a surplus of capesize vessels in the Pacific to haul
coal and iron ore.
The
index tracking transport costs on international trade
routes fell 83 points, or 0.9 percent, to 9,230 points,
data from the Baltic Exchange in London showed. That’s a
4-percent weekly gain. Capesizes slid 1.3 percent,
retreating from an 8- percent gain in the previous four
days.
“There
are a lot of ships” in the Pacific, Dorian Benson, a
director at freight-derivatives brokerage GFI South
Africa, said by telephone Friday. A large iron-ore
producer has taken the ships it needed, so capesize
rates that “went up hard over the last week” are now
correcting, he said. Iron-ore demand has been driven by
China, which imported 20 percent more of the commodity
in the first five months of this year compared with the
same period in 2007. Steel output rose 9.4 percent by
comparison and record stockpiles built. China needs the
ore to make steel for construction as it experiences the
fastest growth of any major economy.
Some
Chinese steelmakers have been ordered to close furnaces
to cut pollution for the Beijing Olympics next month.
That could dampen iron-ore demand. Tangshan Iron & Steel
Co. said on July 8 that production won’t drop when it
shuts three furnaces. Shougang Corp., the only
steelmaker in the capital, said in May it will run only
one of its four furnaces.
The
Baltic Dry index remains 22 percent shy of a record
reached on May 20. The current decline, marked by an
eight-day slide last month, is “nothing more sinister
than a short-term correction,” Deutsche Bank AG said in
a report dated Friday.
“Looking
into the second half of this year, we believe it is
difficult to maintain our bearish outlook for freight
markets,” Michael Lewis, a London-based analyst, said in
the report. Asian growth continues and “delays in
dry-bulk vessel deliveries are expected to keep the
supply side tight for the foreseeable future.”
Investor
expectations for freight rates were mixed according to
forward freight agreements, financial instruments used
to bet on future prices.
Capesize
contracts for July to September rose 2 percent to
$164,000 a day, prices from Oslo-based broker Imarex NOS
ASA showed. Panamax contracts in the period fell 0.1
percent, to $74,250 a day.
Trade in
FFAs will climb about 20 percent this year, Duncan Dunn,
a senior director at shipbrokers Simpson Spence & Young,
said at a presentation to journalists in London last
Thursday. Panamaxes account for about 60 percent of
volume and capsizes about 28 percent, he said.
(Bloomberg) |
