bulk freight rates, driven by higher volumes of iron ore and
coal, are likely to increase transportation costs and delivered
prices for other commodities, such as bauxite, alumina, copper
concentrate and nickel ore, analysts at JPMorgan Chase &
Co. said in a note Sept. 2.
The increases could be
passed along to refined metal, the analysts said, suggesting
that nickelespecially the nickel contained in Chinese
nickel pig iron productionhas the greatest exposure to
possible changes in ocean freight rates.
"Wood Mackenzie (Ltd.)
estimates that current ocean freight rates equate to between 16
and 21 percent of nickel pig iron production costs, depending
on the technology used," the analysts said.
In aluminum, where
Chinese smelters are reliant on imported bauxite, the JPMorgan
analysts estimate that bauxite ocean freight rates account for
almost 2 percent of final aluminum production costs.
"In copper, industry
estimates place ocean freight at about 2.9 percent of total
cash costs. The outlook for commodity trade flows and freight
rates is likely to remain solid over the medium term in a
variety of plausible scenarios," they added.
A version of this article was first published by AMM sister
publication Metal Bulletin.