Bulker Spot Freight Drops with Less Chinese Iron Ore Import

International spot freight of large-size bulk carriers has dropped. Last week, the spot freight for trans-Pacific route represented below US$ 20,000 (1.76 million yen) per day for the first time since September 2009. Chinese steel makers are recently increasing procurement of domestic iron ore when international ore price is strongly surging. As a result, Chinese iron ore import is decreasing.

Spot freight of cape size bulker was around US$ 37,000 per day for Atlantic-Pacific ocean route last week, less than a half of US$ 80,000 in early June, according to Japanese integrated steel maker source. The freight for trans-Pacific route dropped to around US$ 19,000 from US$ 50,000 level. The iron ore freight is US$ 21-22 per tonne for Brazil ore and US$ 8 for Australian ore to Far East.

New bulker buildings are currently 190 ships per year, higher than 110 ships in 2009. Bulker supply is increasing while Chinese iron ore trade is decreasing. Chinese iron ore import is currently concerned to decrease more along domestic steel makers’ output reductions.

Chinese iron ore import deceased by 6.2% to 51.9 million tonnes in May from April while the import increased by 8.4% to 262 million tonnes for January-May from the same period of 2009. Chinese pig iron production increased by 14.3% to 52.3 million tonnes in May from April, which hit the monthly record, and expanded by 20.6% to 254 million tonnes for January-May from the same period of 2009. These figures suggest Chinese steel makers’ shift to domestic iron ore from high cost imported ore.