Baltic sea index up on higher Atlantic grain activity

Thu Apr 12, 2012
By NR Sethuraman
April 11 (Reuters) - The Baltic Exchange's main sea freight index, which  tracks rates for ships carrying dry commodities rose on Thursday, as a spurt in grain activity pushed rates higher for panamax vessels.

The overall index, a gauge of the cost of shipping commodities such as iron ore, cement, grain, coal and fertiliser, rose 16 points or 1.69 percent to 960 points.

"The biggest move has been on the panamaxes, particularly the rates for ships from the Atlantic to the Pacific. They are benefiting from the increase in grain cargoes from South America," said Peter Norfolk, research director at freight broker FIS.

At this time of the year the Latin American grains tend to account for the biggest volumes in the export season, said Norfolk.

The Baltic's panamax index gained 38 points or 3.54 percent to 1,110 points, with average daily earnings for panamaxes rising $304 to $8,874, rates not seen since January.

Panamaxes usually transport 60,000 to 70,000 tonne cargoes of coal or grains.

The Baltic's capesize index rose 0.96 percent to 1,576 points.

Average daily earnings for capesizes, which typically transport 150,000 tonne cargoes such as iron ore and coal, were up at $7,080.

The capesize rates were mainly driven mainly by higher Chinese iron ore activity, analysts said.

Traders pushed spot iron ore prices to six-month highs in anticipation of a brisk pickup in steel demand in China, with Shanghai rebar futures hovering near three-month peaks on Thursday.

"Overall the market appears to tighten in line with seasonal higher activity, but the task to regain sustainable higher rates above cash break-even remains an uphill battle, to say the least," RS Platou Markets analyst Frode Morkedal said in a note to clients.

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

"We still have big over supplied ships. Any sort of upward movement in the rates is likely to be capped for the time being," Peter Norfolk of FIS said.

(Reporting by NR Sethuraman in Bangalore; Editing by Jon Loades-Carter)