Baltic sea index falls as panamax rates drag

Wed May 2, 2012
May 2 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell for a third straight day on Wednesday, led by a drop in panamax rates.

The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, lost three points or 0.26 percent to 1,149 points.

The Baltic's panamax index fell 1.17 percent, with average daily earnings down to $13,509, and analysts were divided on the near-term prospects for panamax vessels, which usually transport 60,000-70,000 tonne cargoes of coal or grains.

Seasonal grain exports from Latin America have boosted demand, but those exports are expected to wind down.

"The panamax market has experienced a major upturn the last couple of weeks. This trend has now stopped, and it might only be a short-lived correction until rates will keep on firming," broker firm Fearnleys in its weekly report.

With current vessel supplies, rates could move up a bit in the near term, McQuilling Partners said in its market commentary.

However, RS Platou Markets analysts expect panamax rates to drop going forward.

"With the panamax rally having run its course as most prompt cargoes are already covered, we expect to see rates ease further in the Atlantic as the grain export season ends in coming weeks," RS Platou analysts said in a note.

The Baltic's capesize index rose 0.07 percent to 1,495 points.

"Tonnage lists have increased all around once again, and it is likely that we will see conditions worsen further over the coming days as there has been no indication of a recovery of demand from China or Europe," Greek broker Intermodal said in its weekly report.

The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 34 percent this year.

(Reporting by NR Sethuraman in Bangalore, editing by Jane Baird)