The Baltic Dry Index, a measure of shipping costs for commodities, had its worst week since October as Chinese demand for shipments of coal and iron ore slowed.
The index tracking transportation costs on international trade routes today slid 135 points, or 4.6 per cent, to 2,772 points, according to the Baltic Exchange. That took its weekly drop to 17 per cent, the most since the end of October.
“The Chinese have backed off and it’s starting to show in the number of shipments this month,” Gavin Durrell, a Cape Town-based official at Island View Shipping SA, Africa’s biggest commodities shipping line, said by phone today. “Iron ore and coal seem to be slowing down.”
China’s record coal and iron ore imports in the first half helped the index to advance as much as fivefold this year, reversing some of the record 92 per cent collapse in 2008. Demand rose after the country’s government announced a 4 trillion yuan ($586 billion) stimulus package.
Daily rental rates for every class of ship tracked by the bourse declined today, led by a 5.6 per cent slump to $20,880 for panamaxes, ships designed to navigate the Panama Canal.
Capesizes, ships most commonly used to haul about 170,000 metric tons of iron ore around South Africa’s Cape of Good Hope or Chile’s Cape Horn, lost 5.2 per cent to $45,428 a day.
Smaller supramaxes fell 5 per cent to $19,242 a day and handysize ships lost 2 per cent to $12,051 a day.
Rates are declining as Chinese steelmakers delay imports while they negotiate annual iron ore prices with producers such as Rio Tinto Group, BHP Billiton Ltd and Vale SA, Durrell said. “I don’t think they will come back until they agree,” he said.
The drop reflects a wider slide in demand for raw materials that will likely push prices for metals, commodities and energy lower, Eugen Weinberg, a senior commodity analyst at Commerzbank AG in Frankfurt, said by phone on Thursday.
The Baltic Dry Index has slumped 35 per cent from this year’s high on June 3. The Standard & Poor’s GSCI Index of 24 commodities has climbed 7 per cent over the same period.
Derivatives betting on the Baltic Exchange’s future assessments fell for a third day, indicating the declining spot market is causing traders’ future expectations to deteriorate.
October-to-December forward freight agreements, or FFAs, for capesizes lost 4.7 per cent to $36,750 a day, according to prices from Imarex ASA, a broker of the accords. That implies traders expect the market to drop 19 per cent by year-end.
Panamax contracts fell 1 per cent to $17,625 a day, implying a 16 per cent decline.
