Rise in Iron Ore value could increase ship earnings

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As iron rates rally for the first time in a three year low, there is hope that the earnings of the ships used to transport it will earn above operating costs for the first time this year.

Chinese steel mills are expected to increase iron-ore imports following a 1 trillion-Yuan government investment to the building industry, funding infrastructure projects which are hoped to resuscitate steel demand.

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China accounts for 65 percent of seabourne demand for iron ore, buying the most ore in three months in August this year. Stockpiles of ore stored at ports fell for the first time since March, according to government and Shanghai Steelhome Information data.

Capesize ships, capable of carrying 160,000 metric tonnes of ore will earn $12,500, a day in the fourth quarter, compared with $4,459 on average since the end of June, according to Bloomberg.

Ore prices, which neared a three year low at the beginning of the month have since rallied to 21 percent, following investment announcements from the Chinese Government. It is hoped that increasing demand for ore, which is the second biggest cargo after oil, will help diminish a glut in shipping, after fleet expansion outpaced growth in demand.