The Baltic Dry Index, a measure of commodity shipping costs, fell below 1,000 points for the first time since January 2009 on signs Chinese demand for iron ore cargoes is slowing, exacerbating a glut of vessels.
The index slid for a 20th session to 974 points, extending this year’s slump to 44 percent, data from the London-based Baltic Exchange show. Charter rates fell for all four vessel types within the gauge. The largest decline was for capesizes carrying the steelmaking raw material, which fell 8.3 percent.
Weakening demand for iron ore in China, the biggest consumer, is resulting in fewer charters of the vessels, said Kasper Moller, director of shipbroker Maersk Broker Asia. Capesizes represent about 40 percent of the global fleet of commodity carriers, estimates Clarkson Plc, the world’s largest shipbroker.
“If the Chinese market just takes its foot off the accelerator for a second that has an immediate impact,” Moller said by phone from Beijing today. “We’re having a lot of new ships being delivered, too.”
China, the biggest source of global shipping demand, is slowing iron ore imports before Lunar New Year holidays that start on Jan. 23, Oslo-based RS Platou Markets AS said yesterday. Weather-related port disruption curbed shipments from Australia and Brazil while rains in Colombia and Indonesia have constrained coal exports.
The slowdown coincides with deliveries of new ships that are expanding faster than demand, according to Maersk Broker. Trade will swell 8 percent this year compared with 12 percent for the fleet, it estimates.
Returns for capesize vessels slumped to $7,793 a day, the lowest since May 20 and a 76 percent decline from their 2011 high of $32,889, set on Dec. 12, exchange data show. Average earnings fell for the other three classes of dry bulk vessels tracked by the gauge, with hire rates for panamaxes, the largest to transit the Panama Canal, at a 33-month low.