Iron ore and coal shipping rates rose to a record for a second day and may extend gains on expectations increasing dry-bulk trade will bolster freight costs.
The Baltic Dry Index, an overall measure of commodity- shipping costs on different routes and ship sizes, added 0.51 percent to 10,853 on Monday, according to the London-based Baltic Exchange. It has more than doubled in the past year.
''On the back of bullish sentiment going into this week, with spot volumes staying robust and the freight futures agreement market rising, dry bulk shipping rates could go flat or even edge up further over the next few days,'' Henrik With and Glenn Lodden, analysts at DnB NOR Markets said in a report today.
In the market for Freight Futures Agreements, or FFAs, the November 2007 rate for a capesize, the largest type of dry-bulk vessel, sailing to China from Brazil rose for a sixth day to $85.06 as of Oct. 22. FFAs are used to speculate on or protect against swings in the cost of transporting goods.
BHP Billiton Ltd., the world's biggest mining company, increased first-quarter iron ore production by 7 percent to a record 25.9 million tons in the three months ended Sept. 30, the company said today. Iron ore is the single-biggest commodity shipped by sea. Demand for commodities from China, the world's biggest consumer of raw materials, will stay strong, BHP Chief Executive Officer Marius Kloppers said last week.
'Remain Strong'
''Dry-bulk rates continue to remain strong,'' Cantor Fitzgerald analysts Natasha Boyden and Noah Parquette said in an Oct. 22 report. ``''While soaring spots for capesize vessels have been the primary focus of the market, strong period charter activity is also driving the sector.''
Athens-based Diana Shipping Inc. said on Oct. 17 it plans to buy two Capesize vessels for $275 million. One of the vessels, the MV Thalassini Kyra is to be delivered next February, at which time the ship will be on charter for as long as 61 months, for about $72,000 per day.
Still, the freight rate rise may be capped by easing congestion at Australia's Newcastle, the world's biggest coal- export harbor. Bottlenecks at ports worldwide have contributed to freight rates more than doubling this year.
A total of 20 ships departed Newcastle port for the week ended Oct. 20, compared with 13 the previous week, the port said in a statement today. Thirteen vessels left for Japan, five for Taiwan and one each to Korea and Ireland.
The number of ships waiting to load coal at Newcastle fell to 37 as of Oct. 22 from 43 on Oct. 15, Newcastle Port Corp. said on its Web Site. The coal carriers waited an average of 15.55 days to load from 20 days a week earlier. The port's coal shipments rose to 1.96 million tons in the week ended Oct. 22, from 1.66 million tons a week earlier, Newcastle Port said.
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