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Freight seen costlier ahead of dry bulk rate revisions

Freight seen costlier ahead of dry bulk rate revisions
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First Published: Thu, Nov 15 2007. 12 06 AM IST
Updated: Thu, Nov 15 2007. 12 06 AM IST
Singapore: Dry bulk freight rates may extend gains from a record on speculation that coal and iron ore buyers will speed up purchases before producers increase annual contract prices next year.
The Baltic Dry Index, an overall measure of commodity shipping costs on different routes and ship sizes, rose 0.4% to its highest of 11,039, according to the London-based Baltic Exchange. The hiring rate for a capesize, a vessel which can transport 175,000 tonnes of dry bulk cargo, rose 1.6% to an all-time high of $190,668 (Rs74.93 lakh) a day. Chinese, Japanese and South Korean commodity buyers are negotiating prices for iron ore and coal with miners in Brazil and Australia at a time of rising prices in the market for spot cargoes. The anticipation of a price rise may prompt utilities to raise imports over next few months.
“With spot coal prices reaching new highs, there are now expectations that contract coal prices for next year may jump by more than 25%,” Henrik With and Glenn Lodden, Oslo-based analysts at DnB NOR Markets, said in a report on Tuesday.
STX Pan Ocean Co., South Korea’s largest carrier of commodities, said the dry bulk market “has entered a super cycle.” Demand from China and India will spur global demand for vessels, the company said. India will follow China in becoming a major raw material importer as it plans to increase power plant capacity to 118,870MW by 2012 from 72,030MW this year, STX Pan Ocean said.
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First Published: Thu, Nov 15 2007. 12 06 AM IST