Wednesday, July 08, 2009
Baltic Dry Index posts 2nd straight weekly drop
Monday, 06 July 2009
The Baltic Dry Index, a measure of shipping costs for commodities, posted a second straight weekly decline on concern that demand to haul iron ore is set to slow. China's iron-ore imports in March, April and May were the highest for data on Bloomberg going back to 1999, helping drive a record increase in first- half freight rates.
Inventories are 6.6 per cent short of a high reached last September, according to data going to 2006. Demand may be sated for now, taking ship rates lower, Nomura Holdings Inc said.
'China's coastal iron- ore inventory is a concern,' Mark Yoon, a Seoul-based analyst with Nomura, said in a report dated July 3.
'This could lead to lower imports in the near term, in line with our view that rates could take a breather.'
The index tracking transport costs on international trade routes fell 152 points on Friday, or 4.1 per cent, to 3,520 points, according to the Baltic Exchange. That gives a 4.9 per cent decline for the week, following last week's 9 per cent retreat.
Rates to hire capesize ships that typically transport iron ore, shed 10 per cent last week to US$71,088 a day. That will drop to an average of US$45,500 this quarter, according to forward freight agreement (FFA) data from Imarex NOS ASA at 3:05pm in Oslo.
FFAs are used to bet on or hedge against future freight rates.
Source: Bloomberg
