Shipping costs on the rise

Shipping costs are on the rise according to the Baltic Dry Index, which last week saw its largest gain since 2009.

The 18 per cent jump is expected to raise the costs of an iron ore industry already under considerable pressure.

Charter costs for Capesize vessels travelling from Brazil to China climbed 16 per cent, up to $US14.59 per tonne.

The day rates for Capesize vessels have jumped considerably since the end of August, from $US7179-8288 up to $US13,563-14,658.

The Australian iron ore market will not be hit quite so hard by the increased average shipping costs due to the shorter distances travelled between Australia and China, taking a third of the time needed for transport from Brazil.

In an interview with SMH, Commodore Research managing director Jeffrey Landsberg said some investors misunderstood the Chinese economic situation, believing they were not buying iron ore, when actually they continue to be the biggest consumer of iron ore in the world.

"China is still buying every single ton that global miners want to sell,” he said.

In the year to date China has imported 76.67 million tonnes of iron ore, which is not far from the amount imported in the same period in 2014.

On September 10 iron ore hit a 10-week high at $US58.50 per tonne.

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