Coal, iron ore shipping rates rise to record for a 3rd day

The cost of hiring ships to transport dry goods such as iron ore, coal and grains rose to a record for a third day and may extend gains next week on expectation of rising Chinese demand.

The Baltic Dry Index, an overall measure of commodity- shipping costs on different routes and ship sizes, rose 1.5 percent to 7,586 Thursday, according to the London-based Baltic Exchange. It has advanced 5.2 percent in the past five days.

"The demand is just insatiable," Alex Harkess, director for dry-cargo chartering at Clarkson Asia Pte in Singapore, said by phone Friday. "Iron ore is moving predominantly from Brazil, Australia, South Africa and west coast India and it's all heading into one place, into China."

Steel consumption by China, the world's fastest-growing major economy, may rise 12 percent to 446 million metric tons this year, increasing to as much as 520 million tons by 2010, the China Iron and Steel Association said this month.

Record prices for iron ore and nickel are prompting producers including BHP Billiton Ltd. to expand output as China demands more commodities.

China's demand for coal is also pushing rates up. Its shift to a net importer of coal has also prompted countries including South Korea to look for the fuel elsewhere such as South Africa, causing a shift in routes which tie up ships longer.

Rates for hiring a capesize carrier, which typically hauls 175,000 tons of goods, to China from Tubarao in Brazil rose 1.2 percent to a record $65.75 a ton Thursday, according to the Baltic Exchange. Capesize carriers are the biggest type of dry- bulk vessels.

The daily rental rate for panamax carriers, capable of transporting 70,000 tons of dry goods in bulk, rose 1.9 percent to $60,275 yesterday, according to the Baltic Exchange.

The Baltic Panamax Index, a measure of rates on four routes for such vessel, added 1.9 percent to an all-time high of 7,472 yesterday, according to the Baltic Exchange. The measure last closed at a record on July 31 at 7,384.