Charter rates for Capesize ships, the biggest carriers of iron ore, fell the most in two months as demand declined for the steel-making raw material from China, the world’s biggest buyer of the commodity.
Daily hire costs for Capesizes declined 7.7 percent to $5,875, figures from the London-based Baltic Exchange showed today. That’s the biggest collapse since Dec. 19, according to the exchange. Capesizes are the largest vessels tracked by the Baltic Dry Index, a broader measure of costs to transport minerals and grains by sea, which lost 1.2 percent to 738, the lowest level since Jan. 8.
Chinese port inventories fell to 66.9 million tons on Feb. 1, the lowest since January 2010, according to researcher Beijing Antaike Information Development Co. The arbitrage, or price gap, “is currently negative,” as the cost of imported iron ore has risen above domestic prices, according to RS Platou Markets AS. Iron ore delivered to the Chinese port of Tianjin climbed to $158 a dry ton, staying at the highest level since Jan. 10, figures from the Steel Index Ltd. showed.
“Physical buying activity expected after the Chinese New Year has not emerged,” Peter Norfolk, a London-based analyst at shipping and commodity derivatives broker Freight Investor Services Ltd., said by phone today. “As we move away from the Chinese winter season, building activity should pick up and demand for steel accelerate.”
Among the three classes of smaller ships tracked by the exchange, Panamaxes, the biggest vessels to navigate the Panama Canal, added 1.7 percent to $6,845. Supramaxes, about 25 percent smaller, gained 1.2 percent to $7,186. Handysizes, the smallest ships in the index, were little changed at $6,123, staying at the lowest level since Nov. 20.