Iron ore freight rates may extend losses

Freight rates on capesize dry cargo look set to extend recent sharp losses as more than a 10th of Australia's iron ore output remains shut in, adding to a spot market already hurt by weak demand, shippers said recently.

BHP Billiton said yesterday it had yet to set a date to restart its giant Yandi iron ore mine in Australia, which produces about 40 million tonnes out of exports that ran at 325 million tonnes last year. Bulk rates on the route from Western Australia to China fell 7.5 per cent to close at 19,227 points on Friday, having tumbled almost 30 per cent so far this month. The market capesize freight rate between the two countries fell to US$19.23 per tonne on Friday, down from US$26.46 per tonne at the start of the month, a shipper said. 'In the short-term that will limit cargo supply. The market is down and it's been quite a slow period for charter activity,' said Peter Norfolk, director of shipbrokers Simpson, Spence and Young. 'For the time being, things look pretty quiet.' Some analysts had expected Yandi to restart yesterday, as mine safety closures related to fatalities normally last only about one day. The Yandi mine, 500km from the western coast of Australia, accounts for roughly 10 per cent of the globally traded market. The outage comes at a time when demand from Chinese mills is already soft in the face of weaker domestic steel markets. Top Chinese mills have already cut steel prices, and many smaller ones were shut due to Olympics restrictions and rising costs.
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