Returns (BCAVRT) for Capesize ships that haul commodities including iron ore and coal plunged to the lowest in 12 months as Chinese steel production slows and raw material prices fall.
Daily returns for Capesize vessels fell to $4,881 today, according to the Baltic Exchange, a London-based provider of freight costs on 29 dry-bulk routes. That’s the lowest price since March 2 last year, the exchange data show.
China’s steel production is slowing as the world’s fastest- growing major economy starts to shift its focus to consumers rather than large building projects, BHP Billiton Ltd. (BHP), the world’s biggest mining company, said at a conference in Perth today. Iron ore prices have averaged $141.20 a metric ton this year, down 16 percent from the 2011 average, according to data from the Steel Index Ltd.
“A full-blown recovery to match our yearly average target of $13,000 a day remains an uphill battle,” Oslo-based investment bank RS Platou Markets AS said in an e-mailed report.
Capesizes are the largest vessels in the Baltic Dry Index, a broader measure of costs to transport commodities. The gauge advanced for a 19th session, the longest winning streak since it rose for 23 days in June 2009. The index rose 0.6 percent to 884 as charter rates for three of the smaller ship classes tracked increased, figures from the exchange showed.
Panamaxes, the biggest ships that can navigate the Panama Canal, advanced 1.4 percent to $8,037, the longest winning streak in five months, according to the exchange. Supramaxes, about 25 percent smaller, added 2.7 percent to $10,340. Handysizes (BHSATCR), the smallest ships in the index, rose 1.7 percent to $7,915, the highest rate in more than nine weeks.