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After Longest Gaining Streak Since 2006, Capesize Rates Fall

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July 2, 2013

. File photo. Image courtesy NYK Lines

July 2 (Bloomberg) — Rates for the largest iron ore-carrying ships fell, ending the longest winning streak since 2006, on speculation demand for cargoes of the steelmaking raw material will weaken.

Daily charter costs for Capesize vessels, each able to haul at least 150,000 metric tons, declined 2.3 percent to $14,866, figures from the London-based Baltic Exchange showed today. Rates climbed for an 18th session yesterday, the longest run since August 2006, according to data compiled by Bloomberg.

Chinese prices for hot-rolled coil, a benchmark steel grade used in cars and construction, dropped 17 percent this year, data from Metal Bulletin Plc show. Steel reinforcement-bar futures retreated 7.3 percent last quarter in Shanghai trading, the fourth drop in five. China is the world’s biggest consumer of iron ore.

“We are in the quiet season now for Chinese steel consumption, so we would only expect this rally in iron-ore shipments to last so long,” Dominic Meredith Hardy, an analyst at Galbraith’s Ltd., a London-based shipbroker, said by e-mail today. “There are still a lot of Capes in the market.”

The Capesize fleet swelled 2.6 percent this year after expanding by a record 82 percent between 2008 and 2012, according to data compiled by Bloomberg. Charter rates fell today on all nine Capesize routes tracked by the exchange for the first time since May 15.

The Baltic Dry Index, a broader measure of costs to transport raw materials by sea, slid 0.8 percent to 1,170, according to the exchange.

Among the three classes of smaller vessels tracked by the gauge, Panamaxes, about half as big as Capesizes, added 0.2 percent to $8,080 a day. That was the highest rate since May 1. Supramaxes slid 0.3 percent to $9,954 and Handysizes, the smallest ships in the index, climbed 0.4 percent to $8,342.

– Rob Sheridan, Copyright 2013 Bloomberg.

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