Wed Jun 27, 2012
By Nallur Sethuraman
June 27 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Wednesday on higher rates for capesize vessels.
The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, was up 0.71 percent at 988 points.
The capesize index rose 14 points or 1.2 percent to 1,182 points.
Average daily earnings for capesizes, which usually transport 150,000 tonne cargoes such as iron ore and coal, were up $170 at $3,826.
Capesizes have been moving up slightly on iron ore activity between Australia and China, said Frode Morkedal, analyst with RS Platou Markets.
Recently, there has been some iron ore restocking in China, he said.
However, Morkedal noted that the capesizes are operating at about half of the running cost.
"They need to have higher percentage gain in order to have meaningful impact on actual earnings," he said.
Spot price offers for Australian and Brazilian iron ore cargoes in China dropped on Wednesday as demand thinned amid a sluggish Chinese steel market that is likely to extend through next month as rains slow construction projects.
Iron ore shipments account for around a third of seaborne volumes on the larger capesizes, and brokers said price developments remained a key factor for dry freight.
Rates for supramax vessels were up $229 at $12,852 and those for handysizes were up $40 at $10,334.
"The supramax market is still looking very healthy compared to the other sizes of tonnage," broker firm Fearnleys said in its weekly note.
The Baltic Exchange's panamax index fell 2.2 percent to 981 points, with average daily earnings for panamaxes, which typically transport 60,000-70,000 tonne cargoes of coal or grains, down $178 to $7,815.
Panamax spot rates have been falling on a drop in seasonal South American grain fixtures coupled with oversupply of vessels.
Panamax rates have been affected by the decline in demand for imported thermal coal cargoes in China due to a surge in hydel power production, dry bulk consultancy Commodore Research said in a note.
(Reporting by NR Sethuraman in Bangalore; Editing by Mike Nesbit)
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