Shipping costs for iron ore, coal and other commodities may extend a five-week decline as bottlenecks at Australian ports ease, freeing ships. The Baltic Dry Index (BDI), an overall measure of commodity shipping costs on different routes and ship sizes, fell 4.8 per cent, or 441 points, to 8,702 on Jan 4, according to data from the London-based Baltic Exchange. The BDI has dropped 21 per cent from a record 11,039 on Nov 13 last year. The benchmark for commodity shipping rates has fallen 15 per cent in the last five weeks as coal and ore buyers booked vessels in advance of the year-end holidays, depressing demand for early January. Congestion at Australia's Newcastle, the world's biggest harbour for thermal coal, has eased for two weeks running.
"Tonnage is too much," TC Chang, head of research at TMT Co, a diversified Taiwanese shipping company, said by phone from Taipei. "There are too many vessels now waiting for cargo."
The queue of ships waiting outside Newcastle port to load coal reached 34 vessels as of Dec 31, 2007, down from 47 a week earlier. That compares with the 53 vessels waiting to load coal as of Dec 17 and the record of 79 ships last June, Newcastle Port Corp. said on its website.
The daily hiring rate for a capesize, which can move 175,000 tonnes of cargo, fell 0.8 per cent to US$149,828 on average as of Jan 4. The rate has declined 13 per cent in the past 10 straight days.
"The activities are not much because of the holidays," Ryu Je Hyun, a Hong Kong-based analyst at Mirae Asset Securities, said. "Market players are waiting for the results of the iron ore price negotiations between China and iron ore exporters.
"There's potential demand but for now it's wait-and-see on what will happen to negotiations."
Cia Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd, which account for three quarters of global iron ore trade, began talks last November to set benchmark contract prices for 2008 with Chinese steelmakers, according to the China Iron and Steel Association.
Contract prices, which are valid for 12-month periods, have tripled to a record in five years due to Chinese demand.
The market is expecting the price to increase between "20 per cent and 50 per cent", Mr Ryu said. "The Chinese government needs to finish the negotiations as soon as possible as there's not much inventory of iron ore in China ports."
Still, the rate for panamaxes, or carriers that can haul about 70,000 tonnes of cargo, rose 0.5 per cent to US$63,028 on average as of Jan 4, based on the Baltic Exchange data.
"The demand for grains such as corn is very strong", helping panamax rates rise, TMT's Mr Chang said.
|
