Baltic index dips as rates for bigger vessels tumble

Tue Nov 6, 2012
By Koustav Samanta
Nov 6 (Reuters) - The Baltic Exchange's main sea freight index, which gauges the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, fell on Tuesday as rates for bigger vessels continued to decline.

The main index, which factors in the average daily earnings of capesize, panamax, supramax and handysize dry bulk transport vessels, fell 24 points or 2.47 percent to 947 points.

The Baltic's capesize index slipped 75 points or 3.32 percent to 2,186 points.

Average daily earnings for capesizes, which usually transport 150,000 tonne cargoes such as iron ore and coal, have fallen about 48 percent this year and were down $653 at $14,421 on Tuesday.

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 recent uptick in iron ore stock piles coupled with low-season demand should precipitate a continued slide for Capes," Arctic Securities analyst Erik Nikolai Stavseth said in a note.

Benchmark iron ore touched three-month highs of above $120 a tonne on sustained buying interest from Chinese steelmakers refilling raw material inventories, although the slow increase in prices suggests mills were in no rush to stock up.

Price offers for imported cargoes in China were unchanged on Tuesday, although traders say some mills are snapping up fresh seaborne shipments versus cheaper port stocks.

The Baltic's panamax index dipped 10 points or 1.32 percent to 747 points.

Average daily earnings for panamaxes, which usually transport 60,000 to 70,000 tonne cargoes of coal or grains, have fallen about 55 percent this year and were down $81 at $5,980.

"In the Panamax market, rates in the Atlantic remain soft due to fewer grain and coal cargoes while the Pacific offers stronger returns with better cargo availability out of Australia and Indonesia," RS Platou Markets analyst Frode Morkedal said in a note.

Average daily earnings for handysize ships were down $43 to $6,140, while those for supramax ships were down $83 to $6,835.

Growing ship supply has been outpacing commodity demand for some time now and is widely expected to continue to cap dry bulk freight rate gains in the coming months.

The overall index, which tracks rates for ships carrying dry commodities, has fallen 45.5 percent this year.

(Reporting by Koustav Samanta in Bangalore, editing by William Hardy)