Friday, February 20, 2009
Revival of Brazil iron ore cargoes lifts rates hopes
Michelle Wiese Bockmann - Friday 20 February 2009
EUROPEAN steel mills are booking capesize vessels to ship iron ore from Brazil for the first time since October, brokers have reported, boosting hopes of a sustained recovery in bulk carrier freight rates.
ArcelorMittal was among those mills that this week began to quietly nominate cargoes to be loaded from Brazil in March and April.
“These are the first cargoes to be transported that we have seen for some time,” said a London-based broker. “They’re trying to keep it quiet, but the principals and brokers are receiving nominations. Will it carry on? We don’t know. But for now it’s good.”
Steel mills around the world controversially defaulted on contracts of affreightment for iron ore shipments last October, when the global economic crisis saw the demand for steel collapse.
There have been no iron ore cargoes nominated from Brazil to Europe since then, several brokers familiar with the capesize market told Lloyd’s List.
The resumption of trade is viewed as one of the most positive signs for the global market for dry bulk since the five-year shipping boom ended in the final quarter of 2008. Rates to charter capesize vessels are expected to jump next week, as very few of the global fleet of capesize vessels are available for business in the Atlantic region. “I can count them on one hand,” said a broker.
Steel mills in Asia and Europe redelivered ships early and cancelled time charters or contracts of affreightments in September and October, triggering a dramatic fall in freight rates, as well as a wave of bankruptcies among vulnerable shipowners and operators.
The global steel industry provides business for roughly half the world’s fleet of bulk carrriers. Many mills are currently renegotiating long-term contracts of affreightment signed with owners to ship iron ore rates now much higher than current levels.
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