Hire rates for capesize-class ships, the largest tracked by the Baltic Dry Index, fell the most in more than two months.
Hire rates for capesize-class ships, the largest tracked by the Baltic Dry Index, fell the most in more than two months because December demand to ship iron ore for making steel is mostly met. Daily rents for capesizes slid 7.6 percent, the most since Sept. 22. The Baltic Dry Index, an overall measure of shipping costs for commodities, dropped for a second day, losing 134 points, or 3.3 percent, to 3,902 points today, according to the Baltic Exchange.
Iron-ore demand "has come off aggressively," Steve Rodley, a London-based director of shipping hedge-fund manager M2M Management Ltd., said by phone. Most charterers covered their December loading plans early, and demand for ships on the spot market is scant, he said.
Freight rates have been driven this year by Chinese demand for iron ore, the biggest dry-bulk commodity hauled at sea. National overcapacity of steel led to an excess of iron ore imported to feed mills, according to the China Iron & Steel Association. The country accounted for 46 percent of world crude-steel production in October, according to data from the World Steel Association on Nov. 20.
Capesize rates fell to US$62,708 a day. They will average US$38,125 in the first quarter of next year, according to forward freight agreement data from Imarex ASA at 3:03 p.m. in Oslo. FFAs are used to bet on or hedge against future dry-bulk freight rates.