Bulk Carrier Freight Halves

Spot ocean freight of large size bulk carrier almost halved from the recent peak in June. Spot freight was as high as before economy deterioration when Chinese iron ore import kept the historically high pace. The freight has decreased since July. Spot ship allocation became stagnant for iron ore, according to a Japanese integrated steel maker. China is expected to start inventory adjustment of iron ore. Chinese steel output may enter adjustment phase since Chinese steel market price dropped.

The freight of bulk carrier with Cape size of 170,000 tonnes decreased to US$ 56,000 per day from US$ 120,000 in June from Brazil to Far Eastern channel. The freight of iron ore decreased to around US$ 29 per tonne from US$ 50. The freight decreased to US$ 12 from US$ 18 from Australia to Far Eastern channel.

Chinese iron ore import increased by 31.8% to 355 million tonnes for January-July from the same period of last year. Chinese crude steel output increased by 2.9% to 317 million tonnes while domestic iron ore output decreased by 2.1% to 456 million tonnes. Iron ore import excessively increased. Chinese iron ore inventory at quays keeps above 70 million tonnes since the beginning of this year.

Chinese steel market price has declined since August. Chinese purchase volume of spot iron ore declined, too. Ship allocation for iron ore is decreasing. China seemed to start adjustment of iron ore import and inventory. Chinese crude steel output might be adjusted, though which keeps high level at approximately 600 million tonnes per year.

World ocean trade of iron ore totaled 800 million tonnes in 2008. Chinese iron ore import is expected to exceed 600 million tonnes per year in 2009. The demand for iron ore is shrinking except for China. Chinese iron ore import makes an impact to Chinese crude steel output, iron ore spot price and yearly contract of iron ore starting at the end of this year.