Thu Aug 16, 2012
By Koustav Samanta
Aug 16 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Thursday as rates for capesize vessels sank to touch more than three-year lows due to chronic oversupply and limited activity.
The main index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 8 points or 1.1 percent to 720 points.
The Baltic's capesize index slipped 15 points or 1.34 percent to 1,105 points, hitting its lowest this year.
Earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, was down $141 at $2,877.
The capesize index has fallen about 90 percent this year and is hovering at a level last seen in late 2008.
"Keeping buyers at bay were continued declines in Chinese steel and international iron ore prices, which are down 16 percent and 24 percent, respectively, from the peak in April this year," RS Platou Markets analyst Herman Hildan said in a note.
Prices of raw material iron ore, which are hovering near their lowest in more than 2-1/2 years, may fall further as Chinese steel producers continue to curb output.
China's steel prices are expected to remain weak in the next few months due to a supply glut that will offset an expected increase in demand, the China Iron and Steel Association said.
Shipments of iron ore account for about a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
The Baltic's panamax index remained unchanged from Wednesday at 801 points.
"Some activity in the Atlantic helped keeping Panamax rates in check," analyst Hildan said.
However, earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen more than 51 percent this year.
The panamax segment seems to follow in the footsteps of the capesize segment, with a huge influx of new vessels in the first seven months of 2012, said Peter Sand, chief shipping analyst with ship association BIMCO.
"We expect that 15.5 percent of the panamax fleet will be less than a year old at the end of 2012. This puts mounting pressure on owners to postpone deliveries or even better, to try cancellation of orders if possible," he added.
Average daily earnings for handysize ships were down $54 to $7,263, while those for supramax ships were down $96 to $8,860.
Growing ship supply has been outpacing commodity demand for some time and is widely expected to weigh on dry bulk freight rates in the coming months.
The overall index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 59 percent this year.
(Reporting by Koustav Samanta in Bangalore; Editing by Anthony Barker)
By Koustav Samanta
Aug 16 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, fell on Thursday as rates for capesize vessels sank to touch more than three-year lows due to chronic oversupply and limited activity.
The main index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell 8 points or 1.1 percent to 720 points.
The Baltic's capesize index slipped 15 points or 1.34 percent to 1,105 points, hitting its lowest this year.
Earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, was down $141 at $2,877.
The capesize index has fallen about 90 percent this year and is hovering at a level last seen in late 2008.
"Keeping buyers at bay were continued declines in Chinese steel and international iron ore prices, which are down 16 percent and 24 percent, respectively, from the peak in April this year," RS Platou Markets analyst Herman Hildan said in a note.
Prices of raw material iron ore, which are hovering near their lowest in more than 2-1/2 years, may fall further as Chinese steel producers continue to curb output.
China's steel prices are expected to remain weak in the next few months due to a supply glut that will offset an expected increase in demand, the China Iron and Steel Association said.
Shipments of iron ore account for about a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
The Baltic's panamax index remained unchanged from Wednesday at 801 points.
"Some activity in the Atlantic helped keeping Panamax rates in check," analyst Hildan said.
However, earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen more than 51 percent this year.
The panamax segment seems to follow in the footsteps of the capesize segment, with a huge influx of new vessels in the first seven months of 2012, said Peter Sand, chief shipping analyst with ship association BIMCO.
"We expect that 15.5 percent of the panamax fleet will be less than a year old at the end of 2012. This puts mounting pressure on owners to postpone deliveries or even better, to try cancellation of orders if possible," he added.
Average daily earnings for handysize ships were down $54 to $7,263, while those for supramax ships were down $96 to $8,860.
Growing ship supply has been outpacing commodity demand for some time and is widely expected to weigh on dry bulk freight rates in the coming months.
The overall index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, has fallen about 59 percent this year.
(Reporting by Koustav Samanta in Bangalore; Editing by Anthony Barker)
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