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Shipment rates softened

Shipment rates softened
Prices for iron ore fell sharply for the third straight week and shipment rates softened on the back of declining orders from the economic giant.

Prices for iron ore fell sharply for the third straight week and shipment rates softened on the back of declining orders from the economic giant.

Hopes are fading fast that the new year rebound in Chinese iron ore demand was the start of a lasting recovery. As BHP Billiton and Rio Tinto thrash out 2009 supply agreements with Chinese customers, prices for iron ore fell sharply for the third straight week and shipment rates softened on the back of declining orders from the economic giant.

Adding to the gloomy outlook for Australia's biggest export, a leading commodities analyst has predicted global demand for some types of steel will fall by the biggest margin since 1945.

The stream of bad news undermines BHP and Rio's strong gains on the sharemarket yesterday, following big rises in base metal prices in London on Friday night.

According to the latest industry index, the dollar value of iron ore fell as much as 12 per per cent on the Chinese spot market last week - accelerating its downward spiral from year-to-date peaks in mid-February.

At the same time, rates for shipping iron ore from Western Australia to China dropped US40c to $US7.81 a tonne.

The worrying developments follow reports that Chinese ports are turning away iron ore cargoes because of collapsing demand for the raw material.

And in a sign global consumption will remain depressed for some time, Macquarie analyst Jim Lennon slashed his 2009 forecasts for carbon and stainless steel by 12.2 per cent and 10.9 per cent respectively.

"The numbers ... point to one of the biggest year-on-year declines in carbon crude steel production ever, with the 12.2 per cent year-on-year fall being the biggest since 1945.

"If anything, we still see some downside risk to these numbers," he wrote in a note to clients.

"For stainless steel, 2009 will be the third successive year of decline in world production and this represents a significant disruption to a long period of strong growth."

The problem of excess supplies is a sign the improvement in base metals prices on the London Metals Exchange last week will be short-lived.

But investors desperate for good news shrugged off any long-term doubts, sending market heavyweights BHP Billiton and Rio Tinto up 5 per cent and 4 per cent respectively yesterday.

Mount Gibson Iron, BlueScope Steel and Equinox Minerals were among the other big winners in local trading.

www.TurkishMaritime.com.tr

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