A closed port and ongoing iron ore contract negotiations put ocean charter rates off their peak in January.

In mid-December mining giant Vale (formerly CVRD) announced it would suspend iron-ore shipments from Brazil to China after a port was damaged and could not be repaired. At press time, the port will not be able to ship out until some time in February, cutting off 60,000 metric tons of iron ore a day, the company said.

But while mining firms use the lack of iron ore on the water to boost negotiating power in their ongoing contract negotiations with steelmakers in Asia, the lack of perceived demand for ocean freight sent benchmark rates on the Baltic Dry Index (BDI) down sharply in January. The index has declined 37% since hitting an all-time high of 11,039 last November. Maxim Group analyst Charles Rupinski said that a lot of ships aren't getting hired because companies want to know how much the iron is going to cost before hiring the ship. Once iron-ore prices are settled, Rupinski expects that a lot more ships will be hired.

JPMorgan analyst Jonathan Chappell also said in a note to clients that the BDI slide is only temporary and once the iron-ore contract prices are set, the drybulk rates will trend back up as demand increases again. And while some market analysts say a U.S. recession would impact global ocean bulk freight rates, Chappell said the demand coming from emerging economies like China for commodities will keep drybulk rates high no matter what the U.S. economy does.

Jefferies analyst Douglas Mavrinac said on the recent DryBulk Analyst Forum conference call hosted by CapitalLink that the drybulk market's fundamentals have grown stronger since November, despite dwindling charter rates on the BDI.

At the same forum, Scott Burk of Bear Stearns said, "We think the weakness we have seen in dry bulk day rates has been driven by posturing during the iron-ore negotiations since November, probably both by the Chinese steelmakers and the iron-ore producers, amplified by concerns about the broader world economy."

More evidence that the long-term outlook shows continued high ocean-freight rates: some of the world's biggest mining firms are buying their own vessels and upgrading port infrastructure, as Rio Tinto did recently. The number-three mining firm completed a $1.4 billion expansion of its Dampier iron-ore export port in Western Australia, increasing capacity at the port by 90%.