Saturday, June 19, 2010

Baltic Dry Index Plunges For 16 Consecutive Days

Baltic Dry Index has continued to plunge! It's now 16th consecutive days of huge declines!

On Businessweek:
Baltic Index Has Biggest Weekly Drop Since 2008 on Iron Ore

  • By Alistair Holloway

    June 18 (Bloomberg) -- The Baltic Dry Index, a measure of shipping costs for commodities, had its biggest weekly decline since 2008 as iron-ore demand weakened in the face of higher raw-material costs and lower selling prices for steelmakers.

    The index tracking transport costs on international trade routes slid 18 percent this week, according to the Baltic Exchange. That’s the most since the last week of October 2008. Today the gauge fell 90 points, or 3.2 percent, to 2,694 points, led by a 7 percent drop in rates to hire capesize vessels that typically haul iron ore, a steelmaking raw material.

    “Pressure on steel prices has impacted the capesize market as iron ore resets 23 percent higher for the September quarter,” Omar M. Nokta, head of research at Dahlman Rose & Co. in New York, wrote in an e-mailed note today. Capesize hire rates plunged 33 percent this week, the most since the week ended Oct. 17, 2008.

    Baosteel Group Corp., China’s second-biggest steelmaker, agreed to pay Rio Tinto Group and BHP Billiton Ltd. $147 a metric ton for iron ore, a 23 percent increase, researcher said yesterday. China is the biggest consumer of the commodity, more of which is hauled at sea than any other dry- bulk good.

    Iron-ore producers moved this year to a system of quarterly pricing, ending 40 years of annual accords. Chinese prices for 25-millimeter (1-inch) rebar, steel used to reinforce concrete, have fallen 4 percent in the past month.

    Daily rents for capesizes slid to $29,498 today. Rents for smaller panamax ships that compete for coal and iron-ore cargoes and also transport grains declined 1.3 percent to $23,942 a day. Supramaxes fell 1.6 percent and handysizes slid 1.5 percent, according to the exchange.

    Today’s decline was the 16th in a row for the index, the longest streak since a run of 21 drops ended April 8, 2009. The gauge has slid 34 percent in June.

Posted on Thursday: Baltic Dry Index Continues To Plunge! Are You Worried About the Possible Implications