Iron-Ore Price Slump Seen as Catalyst for Shipping-Rates Rally

A slump in the price of iron ore may be the catalyst for China to start importing more of the steelmaking raw material and for shipping costs to rise, according to Arctic Securities ASA.
Imported ore with 62 percent iron content fell to $129.40 a dry metric ton yesterday in the port of Tianjin in northeast China, the first reading below $130 since December, according to data from The Steel Index Ltd. Charter rates for Capesize vessels that haul the commodity gained 18 percent so far this week to $5,433 a day, according to prices from the Baltic Exchange in London.
“Should the iron-ore price continue to head south, we would expect an uptick in activity for Capes, as we see a restocking cycle imminent -- when the price becomes sufficiently attractive,” Erik Nikolai Stavseth, a shipping analyst at Arctic, an Oslo-based investment bank, said by e-mail today. “We do see upside to the dry-bulk market as we move over summer and shift to a more positive stance.”
Source: Bloomberg