Bloomberg reported that the Baltic Dry Index, a measure of shipping costs for commodities, fell to the lowest in more than 4 months after data showed Chinese demand for coal and iron ore to make steel is tumbling.

According to the Baltic Exchange, the index tracking transport costs on international trade routes slid 72 points or 3.1% to 2,246 points. That’s the lowest since May 11th 2009. The gauge crashed a record 92% last year as steel demand and the world economy slumped. China produced almost half the world’s steel last month. It’s the biggest consumer of iron ore, the largest dry bulk commodity hauled at sea.

Mr Hendrik Leusink division executive for capsize and Panamax vessels at Island View Shipping in Cape Town said that "China’s in what we call off peak mode and not going hell for leather importing iron ore. Also, there are so many more ships coming free for rental while new vessels are being delivered."

According to forecasts from Drewry Shipping Consultants Limited, iron ore will account for 28% of all dry bulk commodities hauled at sea this quarter. Coal burned for power will make up 18% and coal to make steel will comprise 8%.

According to Oslo based specialist investment bank Fearnley Fonds ASA, net growth of the dry bulk fleet has quickened to between 8% and 9% in the past couple of months as compared with about 3% in the first quarter. The portion of capsizes tied up in congestion has dropped to 4% of the fleet from 14% to 15% earlier in the summer. The vessels typically carry coal and iron ore.

(Sourced from www.bloomberg.net)