Bloomberg News

Iron-Ore Ship Earnings Fall as Chinese Steel Production Slows

October 28, 2011

Oct. 28 (Bloomberg) -- Earnings for capesize ships that haul steel making raw materials including iron ore and coal fell for a third day, as Chinese steel production decreased, cutting demand.

Daily returns for capesize vessels decreased 7.2 percent to $28,214 today, according to the Baltic Exchange, a London-based provider of freight costs on 29 dry-bulk routes.

Three capesize vessels have been hired for spot, or single- voyage loadings. Two of the ships were booked to carry iron ore to China from Australia “at $11 a ton, down from rates above $12 a ton seen at the beginning of the week,” Omar Nokta, a New York-based analyst at investment bank Dahlman Rose & Co., wrote in an e-mailed report today.

Chinese steel production for the first 20 days in October decreased 6.9 percent to 1.80 million metric tons from the same period in September, Erik Nikolai Stavseth, an Oslo-based shipping analyst at Arctic Securities ASA, wrote in an e-mail today. China is the top global steel producer.

Prices for iron ore imported into the Chinese city of Tianjin retreated for a 15th session, declining 2.7 percent to $116.90 a ton, according to figures from The Steel Index Ltd. That’s the lowest level since Dec. 29, 2009, the data show.

Earnings fell for all four classes ships tracked by the Baltic Dry Index, which measures commodity shipping costs. Daily hire costs for panamaxes, the biggest ships that can navigate the Panama Canal, declined 0.3 percent to $15,521, according to the exchange. Supramaxes, which carry about 25 percent less than panamaxes, decreased 0.9 percent to $16,155. Handysizes, the smallest ships tracked by the index, decreased 1.6 percent to $11,254.

The Baltic Dry Index retreated 3.5 percent to 2,018 points.

--Editors: Sharon Lindores, Nicholas Larkin

To contact the reporter on this story: Rob Sheridan in London at rsheridan6@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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