shipping at record high

The cost of shipping a ton of iron ore is at a record high. TTY has the closest iron ore to China, and the only Aussie producer to sell all it's ore on the spot market via the Noble Group.
To see the graph of the Baltic Index
http://shipping.capitallink.com/baltic_exchange/stock_chart.html?ticker=BDI

http://www.bloomberg.com/apps/news?pid=20601081&sid=at.wF1UNehC0&refer=australia

Steelmakers are instead hauling more of the steelmaking ingredient from Brazil, increasing average voyage lengths and boosting commodity-shipping rates to records, Jeremy Penn, the Baltic Exchange's chief executive officer, said in an interview on Bloomberg Television today. It costs $45.29 a metric ton to ship iron ore to China from Australia compared with $107.58 from Brazil, according to yesterday's prices from the exchange.


http://lloydslist.com/ll/news/capesize-bulker-breaks-300000-rate/20017535616.htm

Capesize bulker breaks $300,000 rate
Michelle Wiese Bockmann - Thursday 22 May 2008


Capesize indices are hovering at all-time highs.
THE roaring dry bulk market saw a record $300,000 per day passed today to charter a large capesize vessel.

The 203,512 dwt, 2006-built carrier China Steel Team was booked at a rate of $303,000 per day from May 28 for a fronthaul voyage to carry iron ore from Brazil to China.

That is three times more than its last fixture a month ago, when Swiss Marine paid $95,000 per day. The charterer was not reported by the Baltic Exchange.

The bulk carrier is owned by Taiwanese-based China Steel Corp.

Despite the high numbers seen for Brazil cargoes, the cooling panamax sector helped drive the Baltic Dry Index down for a second consecutive day.

The index retreated 123 points (1%) to 11,648 points.

The record-breaking capesize fixture came as Baltic Exchange chief executive Jeremy Penn was reported as saying that customers “wanted a ship at any price”.

He said China’s steelmakers are shunning imports of Australian iron ore as negotiations on the raw material’s price have dragged on to almost seven weeks more than usual.

Mr Penn said steelmakers are instead hauling more iron ore from Brazil, increasing average voyage lengths and boosting commodity-shipping rates to records.

It costs $45.29 per tonne to ship iron ore to China from Australia compared with $107.58 from Brazil, according to prices from the exchange.

“The Chinese are simply not buying as much iron ore right now from Australia,’’ Mr Penn said.

Mike Reardon, a Houston-based researcher with derivatives broker Imarex said the drop was “nothing too extreme”.

He said limited activity in the panamax sector brought rates and sentiment down. “Charterers’ patience has paid off – for now.” he said toay in a report.

“If underlying demand remains firm, however, then commodities will still need to be shipped in due course. Worth noting, again is the continued strength of the smaller classes.”

Handysize indices as well as capesize indices hover at all-time highs, even though the fundamentals driving rates appear unrelated.

The capesize rally has been partly attributed to BHP Billiton, and Rio Tinto Group, locked in negotiations with Chinese steelmakers over the 2008 contract price for iron ore. They want a bigger increase than the 65% that Brazil’s Vale achieved to reflect the freight savings that can be made by shipping ore from Australia rather than Brazil.