Tue Jun 12, 2012
June 12 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose for a third straight session on Tuesday on higher rates for panamax vessels in the Atlantic.
The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 9 points or 1.02 percent to 893 points.
The Baltic's panamax index rose 3.28 percent to 975 points, with average daily earnings for panamaxes, which typically transport 60,000-70,000 tonne cargoes of coal or grains, up $247 at $7,750.
Tonnage for panamaxes in the Atlantic have remained relatively stable over the last week, ship broker BRS said in a report.
"We need to see further positive signs on the demand side to back up this recovery, otherwise we may see rates flattening," it added.
Indonesian coal reference prices are near 18-month lows, which could support exports, potentially a slight positive for panamax and supramax vessels, Wells Fargo said in its weekly report.
Baltic's capesize index dropped 9 points or 0.74 percent to 1,212 points.
Average daily earnings for capesizes, which usually transport 150,000 tonne cargoes such as iron ore and coal, fell $92 at $4,135, levels not seen since 2008 December.
The capesize sector has been on a downward slope due to a weak iron ore demand in China, analysts said.
Shanghai steel futures slipped on Tuesday, weighed down by concerns demand in top steel consumer China will remain weak through next month, prompting major producer Baosteel to cut prices for the first time this year.
Baosteel Group, the world's third biggest steelmaker, said it will cut prices of its main products by around 4 percent in July.
"The steel market appears to have been largely unaffected by the interest rate cut and although long-term loans were up more than expected in May, the steel market remains subdued and thus limits upside to dry bulk near-term," Arctic Securities said in a report.
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Growing ship supply, which is outpacing commodity demand, is expected to cap dry bulk freight rate gains going forward, with economic uncertainty and a slowdown in China adding to headwinds.
(Reporting by NR Sethuraman in Bangalore)
(Editing by Jason Neely)
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