Baltic index up on panamax activity

Mon Jun 11, 2012
By NR Sethuraman
June 11 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, rose on Monday for the second straight day on higher panamax activity.

The overall index, which reflects the daily freight market prices for capesize, panamax, supramax and handysize dry bulk transport vessels, gained seven points or 0.8 percent to 884 points.

The Baltic's panamax index rose 3.28 percent to 944 points, with average daily earnings for panamaxes, which typically transport 60,000-70,000 tonne cargoes of coal or grains, up $237 at $7,503.

"There has been a fair amount of activity in the Atlantic for the panamax vessels with grain cargoes coming out of South America," said Peter Norfolk, head of research at freight broker FIS.

Norfolk said the rise in activity would be a short-lived one.

"We think dry bulk in general will suffer under lack of positive triggers and thus remain weak in the near-term," Arctic Securities said in a research note.

The Baltic Exchange's main index has fallen about 49 percent this year.

Baltic's capesize index dropped two points or 0.16 percent to 1,221 points.

Average daily earnings for capesizes, which usually transport 150,000 tonne cargoes such as iron ore and coal, fell $28 to $4,227, extending its lows to the level not seen since 2008 December.

The capesize sector has been pretty stationary due to concerns about the Chinese demand, Norfolk of FIS said.

China imported 63.84 million tonnes of iron ore in May, up 10.7 percent from the previous month, official data from China's customs authority showed.

"That's a fair amount of rise, but there are still concerns that the Chinese steel sector is not what it was," Norfolk said.

"With the amount of capesize tonnage around, we would need a big jump in iron ore demand, particularly the Chinese demand."

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.

Growing ship supply, which is outpacing commodity demand, is seen capping dry bulk freight rate gains in the coming months, with economic uncertainty and a slowdown in China adding to headwinds.

(Reporting by NR Sethuraman in Bangalore; edititng by James Jukwey)