Another Reason the LCCS Price Just Got Higher

If currency woes, local inflation, VAT rebate changes, soaring oil prices and a booming market for domestic consumption in developing markets like China and India were not alone enough to strike export price inflation fear into regional IPOs, then this article in the Telegraph should put the icing on the mooncake (hat-tip: World Trade Magazine). According to The Telegraph, "The cost of shipping raw materials such as iron ore and coal has soared to a new record as the economic boom in developing economies like China sucks in natural resources to fuel their breakneck industrialization."

The story notes that earlier in the month, the Baltic Dry Freight Index reached a level 150% higher than only one year ago. The index "combines the prices charged for a cross-section of ships from the relatively small Handymax vessels, used to ship anything from steel coils to timber or fertiliser, up to giant Capes, which are used for iron ore and coal." I find it fascinating how transportation costs lower down the supply chain can begin to add up -- considering we often overlook them!

Jason Busch

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