Iron ore and coal freight rates firm at historical highs
July 17, 2008
July 17th (Steel Guru) – Platts reported that iron ore and coal freight rates have steadied at historically high levels as the market continues to defy seasonal trends, leading to predictions that new records will again be set in the fourth quarter.
Recent iron ore freight business for Capesize ships from Brazil to China and or Southeast Asia iron ore continues to be fixed at around the USD 88.00 to USD 88.50 per tonne level for 160,000 tonne cargoes, having recovered from a dip to USD 82 per tonne in the second half of June. The latest business showed South Korea’s POSCO fixing a 170,000 tonne iron ore cargo from Ponta da Madeira to Kwangyang on an August 1-15 loading window at USD 88.50 per tonne on a Transfield ship that has yet to be nominated.
Market is off an all time high of USD 108.50 per tonne seen in mid May, but still remains at historically high levels, bringing little relief to charterers. The USD 108.50 matched the previous all time high achieved in the week of October 9th 2007.
Most of the action has centered around Southeast Asian destinations, other than China, especially South Korea, as Chinese charterers have scaled back some of their spot market activity, having finally agreeing to pricing on long-term iron ore contracts for 2008/2009. Ship brokers also expect imports into China over the next couple of months to be scaled back in order to clear the chronic port congestion at the main discharge terminals and to reduce stockpiles to more manageable levels.
Meanwhile, in the Pacific iron ore rates from Western Australia to China have seen freight rates fall by close to 50% since mid May, when the market peaked at around USD 48 per tonne.
A broker said that “The Western Australian iron ore trade to China, in so far as spot freight, has really slowed down since the end of May, but the market does at least seem to have found a floor for now.”