The Baltic Dry Index has fallen close to 50% over the past 12 months.
One of the main reasons for the costs of shipping bulk commodities declining to a record low is China’s weakened demand for coal, with the country’s seaborne coal imports sliding by 10% in 2014.
Another crucial reason is overcapacity within the market, triggered by ship-owners ordering three times more bulk carriers in 2013 than in 2012, on the back on China’s growing demand for coal. These newbuilds are entering the market now, and by competing for commodities, are pushing the rates down.
The cost of shipping one tonne of iron ore from Western Australia to China has fallen from USD 8 to USD 10 in 2014, to USD 4 to USD 5 today, UBS commodity analyst Daniel Morgan told The Sydney Morning Herald.