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Anchor Ship Investment Co. May Buy First Iron-Ore Vessels

Anchor Ship Investment Co., Japan’s largest ship-fund manager, may invest part of a planned 200 billion yen ($2.3 billion) fund on its first dry-bulk vessels in anticipation of a rebound in Chinese iron-ore demand.

The company plans to start raising money for the new fund in September. The company says the new investment vehicle is targeting an average annual return of 10 percent a year over 10 years.

Anchor Ship plans to add dry-bulk vessels even as the Baltic Dry Index, suffers its longest decline in almost five years. Medium to long-term demand of iron-ore is expected to increase as China’s economic growth spurs demand for steel to make cars, buildings and railways.

The company owns 10 ships, including container vessels, very large crude carriers, a chemical tanker, a car carrier and a liquefied petroleum gas tanker. The ships are leased to Japanese lines, including Nippon Yusen K.K., the nation’s largest shipping company by sales. The new fund may also lease vessels to overseas operators.

Anchor Ship raised just less than 200 billion yen for its first fund, which it started in May 2007.

Baltic Dry Index

The Baltic Dry Index fell for a 27th straight day yesterday in London, dropping 2.8 percent. The index has declined 47 percent during its losing streak, which is the longest since August 2005.

Imports of iron ore in China, the world’s biggest buyer, declined from a year earlier in both April and May, according to customs data tracked by Bloomberg. In the first five months, the tally rose about 8.4 percent to 262 million tons.

Chinese steelmakers are resisting efforts by Vale SA, Rio Tinto Group and BHP Billiton Ltd. to raise contract prices, the China Iron & Steel Association said last month. Shenyin & Wanguo Securities Co. last month downgraded Chinese steelmakers on the prospect of narrowing profit margins and difficult iron ore negotiations.

The nation’s economy may grow 9.5 percent this year leading a 3.3 percent expansion in the global economy, according to the World Bank.

Source: Bloomberg