Shipping costs for iron ore, coal and other commodities may rebound in the second half of this year after annual iron ore price talks are completed, CIMB-GK Research Pte says.
In a bind: Bulk-shipping rates have slumped 34% from a record last November as annual price talks between Chinese steelmakers and iron-ore producers are delayed
Chinese importers of iron ore, the main material for making steel, 'may be temporarily reducing their purchases to influence negotiations' while 'miners are said to be hiding or withholding exports as a means of improving their bargaining power', Raymond Yap, a Kuala Lumpur-based analyst at CIMB-GK, said in a report yesterday.
Bulk-shipping rates have slumped 34 per cent from a record last November as annual price talks between Chinese steelmakers and iron-ore producers are delayed and on concern that the US and Chinese economies are slowing. Cia Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd, which account for three quarters of global iron-ore trade, in November began talks with Chinese steelmakers to set benchmark contract prices for 2008.
The Baltic Dry Index, an overall measure of commodity shipping costs on different routes and ship sizes, dropped 4.2 per cent on Tuesday to 7,336 points, the lowest in almost five months, based on data from the London-based Baltic Exchange. It has fallen 18 per cent this year.
Vale, BHP Billiton and Rio Tinto are pushing for a 25-50 per cent increase in the contracted price of iron ore while Chinese steel producers including Baosteel Group Corp are willing to accept a gain of between 20 and 30 per cent, CIMB-GK's Mr Yap said. Baosteel is China's largest steelmaker.
Contract prices, which are valid for 12 months, have tripled to a record in five years because of rising Chinese demand. China is the world's biggest buyer of the material used in steelmaking.
'Dry freight rates could continue to weaken throughout the first half of 2008 before bottoming some time in mid-2008,' Mr Yap wrote. The average Baltic Dry Index will rise to 8,000 this year from last year's 7,013 before declining to 7,000 points in 2009 and 5,500 points in 2010, he said.
An accord between Chinese steelmakers and ore producers on the 2008 price for the raw material may be delayed by about two months until June, Chen Xianwen, head of market research at the producer-funded China Iron and Steel Association, said on Jan 8.
In a bind: Bulk-shipping rates have slumped 34% from a record last November as annual price talks between Chinese steelmakers and iron-ore producers are delayed
Chinese importers of iron ore, the main material for making steel, 'may be temporarily reducing their purchases to influence negotiations' while 'miners are said to be hiding or withholding exports as a means of improving their bargaining power', Raymond Yap, a Kuala Lumpur-based analyst at CIMB-GK, said in a report yesterday.
Bulk-shipping rates have slumped 34 per cent from a record last November as annual price talks between Chinese steelmakers and iron-ore producers are delayed and on concern that the US and Chinese economies are slowing. Cia Vale do Rio Doce, Rio Tinto Group and BHP Billiton Ltd, which account for three quarters of global iron-ore trade, in November began talks with Chinese steelmakers to set benchmark contract prices for 2008.
The Baltic Dry Index, an overall measure of commodity shipping costs on different routes and ship sizes, dropped 4.2 per cent on Tuesday to 7,336 points, the lowest in almost five months, based on data from the London-based Baltic Exchange. It has fallen 18 per cent this year.
Vale, BHP Billiton and Rio Tinto are pushing for a 25-50 per cent increase in the contracted price of iron ore while Chinese steel producers including Baosteel Group Corp are willing to accept a gain of between 20 and 30 per cent, CIMB-GK's Mr Yap said. Baosteel is China's largest steelmaker.
Contract prices, which are valid for 12 months, have tripled to a record in five years because of rising Chinese demand. China is the world's biggest buyer of the material used in steelmaking.
'Dry freight rates could continue to weaken throughout the first half of 2008 before bottoming some time in mid-2008,' Mr Yap wrote. The average Baltic Dry Index will rise to 8,000 this year from last year's 7,013 before declining to 7,000 points in 2009 and 5,500 points in 2010, he said.
An accord between Chinese steelmakers and ore producers on the 2008 price for the raw material may be delayed by about two months until June, Chen Xianwen, head of market research at the producer-funded China Iron and Steel Association, said on Jan 8.