AS CHINA'S demand for steel-making raw materials declines, coal and iron ore are costing less to ship and handle across the globe.
Analysts say the Baltic Dry Index, which is a measure for the costs of shipping commodities, has dropped 62 points to 1846 points, a drop mostly driven by a reduction in rents for Panamax and capsize ships, which are used to transport iron ore.
Since February 2009, the index has dropped three times and seen a 10% slash in shipping costs. These figures are proof of the instability of the commodity shipping market, brought on by the economic crisis and the plateau in steel demand.
Iron ore producers all over the world have cut production and halted plants, while Rio Tinto says heavy rain is disrupting its iron ore ship loading at the Dampier and Cape Lambert ports in Western Australia.
India's biggest iron ore miner, NMDC, has announced it also expects output to be lower than expected last year because of continuing weak demand from the global steel sector.
According to Metal Bulletin’s Iron Ore Index, China’s iron ore imports have also fallen 5% for the same reasons.
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