THE Baltic Dry Index (BDI) fell 59 points in three consecutive days last week to 1,714 on Thursday due to ongoing negotiations on annual benchmark prices for iron ore imports.
The negotiations will likely be concluded after April 1.
China, the world’s biggest steelmaker, is looking at lower iron ore prices while suppliers such as Rio Tinto, BHP and Vale are waiting for demand to revive.
According to China Daily, an online news portal, talks between miners and Chinese steelmakers may drag for a longer time compared with last year as negotiations are more complicated this time.
As the world’s largest iron ore consumer, China expects to have a bigger say in negotiations, according to the daily.
Iron ore takes up a large chunk of dry-bulk shipping capacity.
The other common cargoes that are carried on dry-bulk vessels are cement, grain, coal and fertiliser.
The decline in BDI is also in line with the world’s crude steel production that is on the downtrend.
The production of the 66 countries reporting to the World Steel Association was 84 million tonnes in February, a drop of 22% year-on-year.
“Crude steel production showed a continued decrease in nearly all the major steel-producing countries in February compared with the same month in 2008, except for Iran and China,” the association said in a statement.
It said Iran recorded an increase of 15.9% in February and the Middle East was the only region showing production growth this month.
“China’s crude steel production for February 2009 was 40.4 million tonnes, an increase of 4.9% compared with the same month last year,” it said.
World Steel Association represents about 180 steel producers (including 18 of the world’s 20 largest steel companies), national and regional steel industry associations, as well as steel research institutes.
Association members produce about 85% of the world’s steel.
The BDI had shown signs of recovery early this year on stronger bookings for iron ore and coal transportation to China before the Chinese New Year and on advanced demand for raw materials to make steel.
The index took a beating last year due to slower iron demand from China post-Olympics, coupled with the global economic downturn that has affected the construction and shipbuilding industries.
The BDI stood at 2,298 points on March 10. It slumped almost 92% last year from its peak of 11,793 points.
Source: Star Online