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LONDON—The Baltic Dry Index, a measure of shipping costs
for commodities, advanced 2.4 percent in London for a
third consecutive gain on Chinese steelmakers’ demand
for iron ore.
Iron ore
is shipped with coal and grains on so-called capesize
vessels that carry loads of as much as 170,000 metric
tons. Iron-ore producers including Brazil’s Cia. Cale do
Rio Doce, the world’s biggest, secured record prices for
annual supply contracts earlier in the year.
“It’s
the amount of iron ore needed to be shipped into China.
If you want to be more subtle about it you are wasting
your time,” Philippe van den Abeele, London-based
managing director of Castalia Fund Management (UK) Ltd.,
said by phone last week. Settling the annual iron-ore
deals and China’s recovery from the worst winter storms
in 50 years helped speed supplies of the ore, he said.
Prices
of iron ore may rise 10 percent next year because of
demand for the material, Deutsche Bank AG said in a
report last week. That should support freight rates.
The
Baltic Dry Index gained 185 points to 8,069 points last
week, according to the Baltic Exchange. That’s the
highest since March 13 and a 51-percent jump over the
past 12 months.
There’s
a “massive shortage” of coking coal, another raw
material in steelmaking, Macquarie Bank Ltd. analysts
including London-based Jim Lennon, wrote in a research
note dated yesterday. Demand for the fuel has pushed
spot prices to about $330 a metric ton, over three times
higher than the current contract price, Macquarie said.
Thermal
coal, burned for electricity, was also pushed to new
highs this year as floods disrupted Australian output
and power shortages in South Africa forced some coal
mines to close.
Thermal
coal derivatives with settlement next year declined 50
cents, or 0.4 percent, to $126.50 a metric ton as of
4:19 p.m. in London, according to GFI Group Inc.
Utilities wanting to burn coal in the European Union
need about twice as many emission permits as they do for
natural gas under the 27-nation bloc’s plan to limit
carbon-dioxide emissions.
UK
natural gas for summer delivery gained 0.7 percent to
55.40 pence ($1.10) a therm as of 4:54 p.m. in London,
Spectron Plc. prices show. Emission permits for December
2008 fell 2.1 percent to €21.80 ($34.04) a ton on the
European Climate Exchange as of 4:55 p.m.
A UK
power utility can make a profit of about 13.25 pounds a
megawatt-hour burning Dutch-delivery coal compared with
10.01 pounds burning UK natural gas in the six months
through September, the clean spark-spread and clean
dark-spread show.
The
spreads are calculated using the forward prices today
for power, gas, coal and permits from energy brokers and
exchanges published by Bloomberg.
German
electricity for delivery next year advanced. Power for
2009 declined 55 cents to €63.25 a megawatt-hour at 6:01
p.m. Berlin time, according to Spectron prices. The
country is Europe’s biggest energy market. (Bloomberg) |
