The biggest rally in rates to ship iron ore since October slowed amid speculation Chinese steel prices need to rebound for the surge to continue.
Daily earnings for Capesizes hauling about 160,000 metric tons rose 3.9 percent to $10,705, according to the Baltic Exchange, the London-based publisher of shipping costs. While that was the 11th consecutive gain, the longest since July, it was also the smallest in eight days.
Chinese steel prices need to rise for ship rates to extend gains, according to Omar Nokta, a New York-based analyst at Global Hunter Securities LLC. As many as 22 Capesize iron ore cargoes were booked this week, compared with an average of 18 to 20 in recent weeks, he said in an e-mailed report. Chinese mills are the biggest buyers of the raw material.
“Activity may be slowing to wind down the week and it remains to be seen if activity levels will remain stronger next week,” Nokta said. “Continued improvement in charter rates likely requires a material jump in steel prices.”
Steel reinforcement-bar futures in Shanghai fell for the first time in six days as the country’s daily crude steel output rose 0.1 percent to 2.16 million tons in early June, according to Custeel.com, citing China Iron & Steel Association data. A preliminary manufacturing indicator released today by HSBC Holdings Plc and Markit Economics showed a larger contraction than the median estimate in a Bloomberg survey of 15 economists.
The Baltic Dry Index, a broader gauge of commodities shipping costs, rose 1.7 percent to 1,012, the highest since Dec. 5, according to the exchange. Daily earnings for Panamaxes carrying about half as much cargo as Capesizes increased 1.1 percent to $7,320. Rates for Supramaxes and Handysizes, the smallest ship types tracked by the index, each added less than 1 percent to $9,577 and $8,054, respectively, data show.
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