Ore-Ship Returns Rise on Speculation Price Drop to Stoke Demand

Earnings for Capesize ships, the biggest carriers of iron ore, rebounded from six sessions of declines on speculation lower prices for the steelmaking raw material will spur buying from leading importer China.
Daily average returns rose 0.4 percent to $4,261, figures from the Baltic Exchange in London showed today. That was the first increase since March 25 for the vessels, each able to hold more than 150,000 metric tons of cargo. The Baltic Dry Index, a wider measure of freight rates, fell for a seventh session.
Ore with 62 percent iron content delivered to the Chinese port of Tianjin slid 5.2 percent last quarter, the third retreat in four, according to a gauge compiled by The Steel Index Ltd. Prices were unchanged today at $135.90 a dry ton, it showed, down 1 percent so far in April from last month.
“Iron-ore prices have dropped slightly, which may have encouraged some limited buying from Chinese steel mills,” Dominic Meredith Hardy, an analyst at London-based shipbroker Galbraith’s Ltd., said by e-mail. “We would expect this to provide a slight support for Capesize rates.”
The ore is measured in dry tons, or metric tons less moisture, which can account for 8 percent to 10 percent of the mineral’s weight.
Steel stockpiles remain elevated in China, which is likely to curb iron-ore buying, Hardy said. Inventories of hot-rolled coil gained 0.6 percent last week to the highest in almost a year, according to data from Shanghai Steelhome Information, an industry research company.
The index dropped 0.6 percent to 861, leaving it down 5.4 percent this week, as daily average returns fell for the three classes of smaller ships it tracks, according to the exchange.
Panamaxes, the largest vessels to navigate the Panama Canal, retreated 1.1 percent to $8,755 and Supramaxes slid 0.3 percent to $9,533. That was the seventh drop in a row for both. Handysizes, the smallest ships in the index, slumped 0.7 percent to $7,797.
Source: Bloomberg