The Baltic Dry Index, a measure of shipping costs for commodities, posted its biggest weekly decline in three months on falling demand for iron-ore transporters.
The index fell 16 per cent to 1,782 points last week, according to the Baltic Exchange. Rents for capesize vessels that typically haul iron ore to make steel slid 15 per cent to US$19,997 a day. Smaller panamaxes that compete for the same cargoes and also carry grains lost 32 per cent to US$11,804 a day.
'Dry-bulk rates may see additional near-term downside, as China's iron-ore imports will likely slow in coming months on elevated inventories,' Justin Yagerman, an analyst at Wachovia Corp in New York, wrote in a note on Friday. 'The seasonal grain trade appears to be near or slightly beyond its peak.'
Demand for Chinese steel has dropped after the global recession weighed on exports and domestic growth fell to its lowest since 2001 in the fourth quarter. China is the biggest steelmaking country.
The world economy is unlikely to rebound quickly from recession this year, John Lipsky, the International Monetary Fund's No 2 official, said last Wednesday. That may check demand for iron ore and other commodities.
Iron-ore inventories in China have climbed 5 per cent this year as domestic prices of hot-rolled sheet, a benchmark steel product, have dropped 14 per cent. Capesize forward freight agreements for the second quarter, used to bet on future shipping rates, fell 1.4 per cent to US$17,875 a day in Oslo. Panamax futures rose 0.5 per cent to US$12,125 a day, data from broker Imarex NOS ASA showed.
Reflecting the downturn in world trade, the cost to transport crude oil from the Caribbean on Aframax tankers also fell last week as the number of ships available grew and US inventories rose. Demand for tankers has slowed as the US, Europe and Japan face their first simultaneous recessions since World War II. The cost to deliver Middle East crude to Asia on March 17 was at its lowest since September 2002.
'The tonnage list worked against owners,' EA Gibson, a shipbroker based in London, said in a market report on Friday. 'Further erosion appears likely.'
Aframaxes on Friday were hired for an average rate of Worldscale 117.25, down 16 per cent from WS 140, according to New York-based Poten & Partners and Houston's Lone Star, RS Platou, down 3.3 per cent from March 18. WS 117.25 is about US$27,080 a day after expenses, such as fuel and port fees. Worldscale points are a percentage of a nominal rate, or flat rate, for tanker shipments on various routes. Flat rates, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing costs.
US crude-oil inventories rose 1.94 million barrels to 353.3 million barrels in the week ended March 13, the US Energy
Department said in a March 18 report. Supplies of distillate fuel, a category that includes heating oil and diesel, increased. Petrol inventories had the biggest gain in two months. US refinery use declined by 0.6 percentage point, the report showed.
Weak demand for voyages in other regions is a disincentive for idle ships to leave the Caribbean, broker Galbraith's, based in London, said in a note. 'Tonnage is expected to remain in this region and build,' the broker said.
More than 40 per cent of US crude imports come from nearby countries, including Canada, Mexico and Venezuela, according to EA Gibson Shipbrokers. The US consumes about one-quarter of the world's crude.
The Caribbean is the world's third-largest Aframax-tanker market, after the Mediterranean and Southeast Asia. An Aframax is the most common tanker used to move oil in the region. It can carry 600,000 barrels of oil.
The index fell 16 per cent to 1,782 points last week, according to the Baltic Exchange. Rents for capesize vessels that typically haul iron ore to make steel slid 15 per cent to US$19,997 a day. Smaller panamaxes that compete for the same cargoes and also carry grains lost 32 per cent to US$11,804 a day.
'Dry-bulk rates may see additional near-term downside, as China's iron-ore imports will likely slow in coming months on elevated inventories,' Justin Yagerman, an analyst at Wachovia Corp in New York, wrote in a note on Friday. 'The seasonal grain trade appears to be near or slightly beyond its peak.'
Demand for Chinese steel has dropped after the global recession weighed on exports and domestic growth fell to its lowest since 2001 in the fourth quarter. China is the biggest steelmaking country.
The world economy is unlikely to rebound quickly from recession this year, John Lipsky, the International Monetary Fund's No 2 official, said last Wednesday. That may check demand for iron ore and other commodities.
Iron-ore inventories in China have climbed 5 per cent this year as domestic prices of hot-rolled sheet, a benchmark steel product, have dropped 14 per cent. Capesize forward freight agreements for the second quarter, used to bet on future shipping rates, fell 1.4 per cent to US$17,875 a day in Oslo. Panamax futures rose 0.5 per cent to US$12,125 a day, data from broker Imarex NOS ASA showed.
Reflecting the downturn in world trade, the cost to transport crude oil from the Caribbean on Aframax tankers also fell last week as the number of ships available grew and US inventories rose. Demand for tankers has slowed as the US, Europe and Japan face their first simultaneous recessions since World War II. The cost to deliver Middle East crude to Asia on March 17 was at its lowest since September 2002.
'The tonnage list worked against owners,' EA Gibson, a shipbroker based in London, said in a market report on Friday. 'Further erosion appears likely.'
Aframaxes on Friday were hired for an average rate of Worldscale 117.25, down 16 per cent from WS 140, according to New York-based Poten & Partners and Houston's Lone Star, RS Platou, down 3.3 per cent from March 18. WS 117.25 is about US$27,080 a day after expenses, such as fuel and port fees. Worldscale points are a percentage of a nominal rate, or flat rate, for tanker shipments on various routes. Flat rates, quoted in US dollars a ton, are revised annually by the Worldscale Association in London to reflect changing costs.
US crude-oil inventories rose 1.94 million barrels to 353.3 million barrels in the week ended March 13, the US Energy
Department said in a March 18 report. Supplies of distillate fuel, a category that includes heating oil and diesel, increased. Petrol inventories had the biggest gain in two months. US refinery use declined by 0.6 percentage point, the report showed.
Weak demand for voyages in other regions is a disincentive for idle ships to leave the Caribbean, broker Galbraith's, based in London, said in a note. 'Tonnage is expected to remain in this region and build,' the broker said.
More than 40 per cent of US crude imports come from nearby countries, including Canada, Mexico and Venezuela, according to EA Gibson Shipbrokers. The US consumes about one-quarter of the world's crude.
The Caribbean is the world's third-largest Aframax-tanker market, after the Mediterranean and Southeast Asia. An Aframax is the most common tanker used to move oil in the region. It can carry 600,000 barrels of oil.
