Dry freight rates will remain volatile in the short term after Asian steelmakers agreed almost to double the price paid for Australian iron ore, analysts said on Wednesday. On Monday, Baosteel - negotiating on behalf of the Chinese steel industry - agreed to pay up to 96.5 percent more for iron ore from Rio Tinto mines.
Japanese steelmakers led by Nippon Steel Corp followed suit on Tuesday, according to Nikkei newspaper. "The contract price of iron ore is rather irrelevant, it doesn't have that much of an effect" said Calum Kennedy, a dry bulk analyst at shipbrokers Clarksons. "If there aren't any ships in the basin, in ballast and ready to load, then rates can move dramatically on nothing," he said.
The Baltic Exchange's main index for sea freight traded at 9,244 points on Wednesday, and has kept within a tight range since its 18 percent decline earlier this month. "It (the price rise) clarifies the position of the iron ore importers," said Peter Norfolk, a director of research at ship consultancy Simpson, Spence & Young. "We still expect freight rates to be volatile in the months to come," he said.
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