Monday, January 26, 2009
Monday, 26 January 2009
The Baltic Dry Index, a measure of shipping costs for commodities, rose for a third consecutive week, boosted by demand for capesize vessels to haul coal and iron ore to make steel. The index advanced 35 points, or 3.7 per cent, to 980 points, according to the Baltic Exchange, an 11 per cent increase for the week. Capesize rates had a 24 per cent weekly gain and have more than doubled this month.
Miners including Brazil's Cia Vale do Rio Doce, the biggest iron-ore producer, are driving activity, shipbroker Fearnley Fonds ASA said in a note on Friday.
'Instead of having inventories in their own backyard, it's better to transport to China,' Rikard Vabo, an Oslo-based Fearnley analyst, said on Friday.
Steel demand has slumped as carmakers and builders cut output and global growth slows.
The UK economy, the fifth-biggest, contracted the most since 1980 in the fourth quarter, data showed on Friday.
December steel output in China, the biggest maker of the metal, fell 5.5 per cent from a year ago, according to the World Steel Association.
Rates to hire capesizes increased 7.3 per cent to US$17,894 a day.
Smaller panamax vessels, the largest to go through the locks of the Panama Canal, advanced 3.6 per cent to US$4,234 a day and gained 7.3 per cent in the week.
Forward freight agreements, derivatives used by traders to bet on future shipping rates, for capesizes advanced 0.7 per cent to US$17,125 a day for the first quarter, the highest in two weeks.
Panamax futures fell 3.2 per cent to US$6,500 for the same period. The data are from Oslo-based broker Imarex NOS ASA.
Freight rates collapsed last year, taking the Baltic Dry Index to a record 92 per cent annual drop.
That may spur fleet operators to seek delays to delivery of new vessels.
Cosco Corp Singapore Ltd said on Friday it will reschedule delivery dates for seven vessels at the request of an unidentified European shipowner.
Deliveries will be three to 13 months later than originally planned.
If orders for new dry bulk ships to be delivered this year and in 2010 are met, 2,097 ships will take to the water.
That's equivalent to 30 per cent of the current fleet, according to Drewry Shipping Consultants Ltd in London.