Baltic shipping index up on higher freight rates

Wed Jun 20, 2012
By Soma Das
June 20 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Wednesday on an increase in activity in the Atlantic and Pacific basins.

The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 18 points or 1.89 percentage to 972 points.

The Baltic's panamax index gained 0.37 percent, with average daily earnings up $31 at $8,699.

"Both basins showed a good upward drive thanks to increased activity," George Lazaridis of Intermodal Shipbrokers Co said.

"The Atlantic witnessed a strong influx of cargoes from both U.S. Gulf and ECSA, while the number of fresh inquiries emerging from Indonesia helped boost levels in the Pacific  and reduce tonnage lists in the area," Lazaridis said.

Analysts, however, expected the uptrend in panamax rates to be limited as an inevitable increase in tonnage supply will take its toll and depress the markets once again.

"We believe further gains to be limited as high coal inventory in China hurts demand and tonnage build up exerts supply pressures," RS Platou Markets analyst Herman Hildan said.

Average daily earnings for handysize and supramax ships were also up, at $10,111 and $11,980, respectively, mainly fueled by improved conditions in the Atlantic basin.

The Baltic's capesize index was up five points to 1,145 points, with average daily rates for capesizes up $66 at $3,486. However, the rates were still at highly depressed levels, very close to multi-year lows.

Analysts expect the capesize rates to remain under pressure in the near-to-intermediate term due to muted iron ore demand in top consumer China coupled with the ongoing problem of oversupply of tonnage.

Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal, with iron ore shipments accounting for around a third of seaborne volumes on the larger capesizes.

"Sentiment seems to be at very low level and there is limited potential for the near term to bring out any real recovery," Lazaridis said.

"It now seems that we will have a long summer period to get through and that conditions will remain tough well into next year."

The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 44 percent this year.

(Reporting by Soma Das in Bangalore, editing by William Hardy)