Monday, March 02, 2009
Iron ore price negotiations - Delay dampens shipping market
Monday, 02 March 2009
DNA quoted industry observers said commodity shipping rates, which rose in early February giving some respite to shipping companies, are expected to fall in the near term. This is following a drop in demand for Indian iron ore from China, which is negotiating its long-term contracts with Australia and Brazil. An executive from a leading Indian ship chartering company said that "We will see a temporary lull in the dry bulk freight market till China finalized its long term contracts. The contracts are expected to be finalized by the next ten days.”
According to a shipping agent “No China bound iron ore cargo has moved out of India in the past four days. The situation has worsened so much that exporters who have committed ships and have already brought the cargo in the port are faced with situations where buyers have withdrawn.”
Another shipping agent said that till early last week the trend was that of exporters taking the advantage of softer freight rates and booking as much cargo as they could before the year end. He said that “This had even seen the Baltic Dry Index, the index of commodity shipping rates, to rise from its December 2008 lows. However, the situation has changed in a week where now the end user and buyer is not confirmed and hence no fresh contracts are being signed. We are hoping this to be a short term event."
While China, the top iron ore importer in the world, sources most of its committed iron ore from Australia and Brazil, its short-term spot requirements are met by imports from India. About 80% of India's iron ore exports are to China.
Source: DNA
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