Bloomberg News

Ore Ships Advance Most in Four Weeks on Cargoes Bound for China

April 09, 2013

Earnings for Capesize ships, the biggest iron-ore carriers, rose the most in four weeks on stronger demand to haul the steelmaking raw material to leading global importer China.

Daily average returns gained 2.4 percent to $4,399, figures from the Baltic Exchange in London showed today. The climb was the biggest since March 12 for the vessels, each able to hold more than 150,000 metric tons of cargo, and the third in a row.

Rates improved as BHP Billiton Ltd. (BHP) and Rio Tinto Group (RIO) hired vessels to haul Australian ore to China, Oslo-based investment bank RS Platou Markets AS said in an e-mailed report today. Ore with 62 percent iron content delivered to the Chinese port of Tianjin today reached a four-week high of $139.10 a dry ton, a gauge compiled by The Steel Index Ltd. showed.

“Capes are up slightly to about $4,400 a day on three ore- carrying fixtures into China,” Sam Margolin, an analyst at Cowen Securities LLC, a New York-based investment bank, said in a report today. “Spot ore prices have increased about $3 a ton in the past two days, but steel inventories at Chinese mills remain high, capping steel prices and margins.”

Stockpiles of hot-rolled coil gained 2.3 percent last week to the highest in a year, according to data from Shanghai Steelhome Information, an industry research company. Australia is the world’s biggest iron-ore exporter.

Capesizes are the largest ships in the Baltic Dry Index, a wider measure of freight rates. The gauge dropped for a ninth session to 856 as returns fell for the three classes of smaller ships it tracks, according to the exchange.

Daily average returns for Panamaxes, the largest vessels to navigate the Panama Canal, retreated 0.6 percent to $8,620, according to the exchange. Supramaxes slid 0.6 percent to $9,433 and Handysizes, the smallest ships in the index, lost 0.9 percent to $7,708, the lowest since March 18.

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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