Wed Aug 22, 2012
By Koustav Samanta
Aug 22 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Wednesday after 31 straight days of declines, as rates for both capesize and panamax vessels steadied.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, climbed 3 points or 0.42 percent to 712 points.
The Baltic's capesize index showed gains after ten straight days of falls, rising 9 points or 0.83 percent to 1,091 points. The index had hit its lowest for the year on Tuesday.
Earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were up $75 at $2,719 on Wednesday. The rates have fallen about 90 percent this year, reaching $2,644 on Tuesday - still shy of the all-time low of $2,316 hit in December 2008.
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.
China's steel mills have defaulted on supply contracts or deferred shipment of up to 4 million tonnes of iron ore this month, traders said, the latest evidence that a slowdown in the country's economy is hurting the world's top steel market.
The price of the steel-making raw material can drop by at least another 15 percent from current levels, according to some traders, if China does not step in with more stimulus measures to boost its economy and lift steel demand.
"We maintain that a falling iron ore price is to the benefit of dry bulk, but underline that the reason for lower prices is a result of weak demand for steel," Arctic Securities analyst Erik Nikolai Stavseth said.
The Baltic's panamax index was up 10 points or 1.2 percent at 843 points.
Earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen about 49 percent this year.
"Panamax ship owners, mainly in the Atlantic, have fared better and lifted rates but brokers said the higher prices were on low volumes resulting in fragile confidence among ship owners," RS Platou Markets analyst Herman Hildan said in a note.
Average daily earnings for handysize ships were down $54 to $6,961, while those for supramax ships, which according to analysts are outperforming all other segments, were down by a dollar to $8,708.
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 gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, has fallen about 59 percent this year.
(Reporting by Koustav Samanta in Bangalore; Editing by Anthony Barker)
By Koustav Samanta
Aug 22 (Reuters) - The Baltic Exchange's main sea freight index, which tracks rates for ships carrying dry commodities, rose on Wednesday after 31 straight days of declines, as rates for both capesize and panamax vessels steadied.
The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, climbed 3 points or 0.42 percent to 712 points.
The Baltic's capesize index showed gains after ten straight days of falls, rising 9 points or 0.83 percent to 1,091 points. The index had hit its lowest for the year on Tuesday.
Earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were up $75 at $2,719 on Wednesday. The rates have fallen about 90 percent this year, reaching $2,644 on Tuesday - still shy of the all-time low of $2,316 hit in December 2008.
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.
China's steel mills have defaulted on supply contracts or deferred shipment of up to 4 million tonnes of iron ore this month, traders said, the latest evidence that a slowdown in the country's economy is hurting the world's top steel market.
The price of the steel-making raw material can drop by at least another 15 percent from current levels, according to some traders, if China does not step in with more stimulus measures to boost its economy and lift steel demand.
"We maintain that a falling iron ore price is to the benefit of dry bulk, but underline that the reason for lower prices is a result of weak demand for steel," Arctic Securities analyst Erik Nikolai Stavseth said.
The Baltic's panamax index was up 10 points or 1.2 percent at 843 points.
Earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen about 49 percent this year.
"Panamax ship owners, mainly in the Atlantic, have fared better and lifted rates but brokers said the higher prices were on low volumes resulting in fragile confidence among ship owners," RS Platou Markets analyst Herman Hildan said in a note.
Average daily earnings for handysize ships were down $54 to $6,961, while those for supramax ships, which according to analysts are outperforming all other segments, were down by a dollar to $8,708.
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 gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, has fallen about 59 percent this year.
(Reporting by Koustav Samanta in Bangalore; Editing by Anthony Barker)
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