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Saturday 27 September 2008
Bulk Shippers Fall on Rates Gloom
Shares in bulk shipping companies fell as much as 11 per cent yesterday as hopes for a recovery in dry bulk freight rates dimmed amid a scale back in global steel mills output.
Shares in bulk shipping companies fell as much as 11 per cent yesterday as hopes for a recovery in dry bulk freight rates dimmed amid a scale back in global steel mills output.
China Cosco Holdings tumbled 11 per cent to HK$8 yesterday while China Shipping Development closed 3.4 per cent lower at HK$10.5. Pacific Basin dropped 10 per cent to HK$6.2.
Analysts revised down their forecast for fourth quarter freight rates as steel mills in China and Russia cut production due to the economic downturn. ArcelorMittal, the world's biggest steelmaker, said it could cut output by 15 per cent in Europe and the United States.
The cost of hiring capesize vessels is expected to plummet the most in at least nine years. The freight rate is expected to fall to US$70,000 a day in the fourth quarter, down from the US$84,000 forecast at the start of the week, according to Bloomberg.
In addition, mainland steel mills will stop importing iron ore from Brazil due to the proposed price increase in the commodity by mining company Vale. Shipping Brazilian iron ore to China is the single biggest component of global demand for capesize vessels.
The Baltic Dry Index would drop 32 per cent next year from the average level of 7,300 points this year, said an HSBC report. It expects the index to fall by another 30 per cent in 2010 to 3,500 points.
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Bulk Shippers Fall on Rates Gloom
Charlotte So
27 September 2008
Shares in bulk shipping companies fell as much as 11 per cent yesterday as hopes for a recovery in dry bulk freight rates dimmed amid a scale back in global steel mills output.
China Cosco Holdings tumbled 11 per cent to HK$8 yesterday while China Shipping Development closed 3.4 per cent lower at HK$10.5. Pacific Basin dropped 10 per cent to HK$6.2.
Analysts revised down their forecast for fourth quarter freight rates as steel mills in China and Russia cut production due to the economic downturn. ArcelorMittal, the world's biggest steelmaker, said it could cut output by 15 per cent in Europe and the United States.
The cost of hiring capesize vessels is expected to plummet the most in at least nine years. The freight rate is expected to fall to US$70,000 a day in the fourth quarter, down from the US$84,000 forecast at the start of the week, according to Bloomberg.
In addition, mainland steel mills will stop importing iron ore from Brazil due to the proposed price increase in the commodity by mining company Vale. Shipping Brazilian iron ore to China is the single biggest component of global demand for capesize vessels.
The Baltic Dry Index would drop 32 per cent next year from the average level of 7,300 points this year, said an HSBC report. It expects the index to fall by another 30 per cent in 2010 to 3,500 points.
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