Thursday, February 05, 2009
Thursday, 05 February 2009
The Baltic Dry Index, a measure of shipping costs for commodities, rose the most since at least 1985 in London as the number of idled capesizes fell to almost zero, indicating strengthening demand for iron ore. Capesize rates have risen more than ninefold from a record low of $2,316 a day on Dec. 2. Steelmakers may be replenishing stocks in China after they fell 22 percent by mid-January from a record in September. Producers abroad, faced with an oversupply of iron ore, may also be shipping ore to China for storage.
“There are no ships at anchor at the moment” except for a few old vessels not acceptable for hire, Oslo-based Fearnley analyst Rikard Vabo said in an e-mail today. As much as a quarter of the world capesize fleet of about 800 ships was probably idled two months ago.
Shipping rates collapsed last year as demand slumped for steelmaking raw materials and Japan, the U.S. and Europe grappled with their first simultaneous recessions since World War II. The steel industry accounts for almost half of all dry-bulk cargo at sea, according to shipping line Golden Ocean Ltd.
The Baltic Dry Index advanced 168 points, or 15 percent, to 1,316 points. The gauge’s 70 percent gain in 2009 is its best start to the year since at least 1986. It fell as low as 663 points on Dec. 5.
Daily rates for capesizes rose 17 percent to $21,810 a day, the highest since October. Smaller panamax ships, the largest to fit through the locks of the Panama Canal, increased 14 percent to $8,005 a day.
“There’s been a real rush of activity this week,” dominated by shipments of coal into China, Susan Oatway, London- based analyst at Drewry Shipping Consultants Ltd., said by phone. “This slight increase in demand has almost corrected the market to a level that’s sustainable for owners going forward.”
Capesize forward freight agreements, derivatives used by traders to bet on future shipping rates, rose 14 percent to $30,375 a day for the second quarter. Panamax futures jumped 12 percent to $16,375 for the same period. The data are from Oslo- based broker Imarex NOS ASA.
The 13-member Bloomberg Europe Metals & Mining Index advanced 8.1 percent to 190.61 points, led by Kazakhmys Plc. ArcelorMittal, the world’s biggest steelmaker, advanced as much as 9.2 percent in Amsterdam trading.
Source: Alaric Nightingale, Bloomberg