Natasha Boyden Comments: Iron Ore Shipping Costs Plunge 47 Pct Amid China Slowdown Risks

January 11, 2012, Steelguru

Bloomberg reported that the cost of hauling iron ore and coal fell to a four-month low, extending this year decline to 47% amid concerns a Chinese economic slowdown will curb steel wwwuction, the biggest driver of global shipping demand.

According to the London based Baltic Exchange rates to hire a capesize ship, the largest in the fleet of dry-bulk vessels dropped 6.1% to USD 14,535 a day. That’s less than half the 2011 high of USD 32,889 reached on December 12.

Ms Natasha Boyden an analyst at New York-based Cantor Fitzgerald LP said "Concerns about a Chinese economic slowdown mean that there are real risks to weaker Chinese steel wwwuction growth in 2012 which the capesize sector is highly leveraged to."

According to the exchange which publishes rates for more than 50 maritime routes the Baltic Dry Index a measure of charter costs for four classes of vessels declined 2.9% to 1,308 points. That the lowest level since August 15. The gauge has fallen 25% in 2012, as earnings for the other vessel types also declined while at a lower pace than capesizes.

Cantor Fitzgerald said a surge in new vessels being delivered from shipyards in January will entrench hire costs for the fleet of 1,335 capesize ships at current lows. Rainy weather in Australia and Brazil, the largest exporters of iron ore, also cut shipments amid falling demand ahead of the Chinese New Year shutdown later this month.

According to the most recent data from the World Steel Association China steel wwwuction has declined for six straight months falling to 49.8 million tonnes in November.