February 25, 2011 / 5:39 PM / 9 years ago

Baltic index rises, capesize market seen pressured

* Slower grain fixtures weigh on panamaxes

* Iron ore stockpiles in China seen high

By Jonathan Saul

LONDON, Feb 25 (Reuters) - The Baltic Exchange’s main sea freight index .BADI, which tracks rates to ship dry commodities, turned barely positive on Friday, although sentiment was expected to remain weak due to a glut of vessels.

The index rose 0.24 percent or 3 points to 1,245 points, after falling in the four previous sessions. That slump followed ten days of gains.

“The main drag on rates this week was a lull in Chinese iron ore fixtures due to record stockpiles,” said Jeffrey Landsberg, managing director of dry bulk consultancy Commodore Research. “This affected capesize rates.

“Gains are certainly possible for the coming week,” he said.

Earlier this month before the modest rally, the index, which tracks the cost of shipping key commodities such as iron ore, cement, grain, coal and fertiliser, reached its lowest in two years.

The Baltic’s main index has remained erratic since 2009 because of swings in Chinese demand for iron ore, the primary ingredient of steel.

“Since the capesize debacle has begun, $4,500/day to $5,000/day has been the artificial level that owners have maintained as a floor for average capesize rates,” Landsberg said.

“Despite capesize vessel supply exceeding demand, owners have resisted chartering out their capes when rates have reached current levels.”

The Baltic’s capesize index .BACI fell 0.3 percent, with average daily earnings dropping to $4,653 in an ninth session of falls. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.

“Capes in all regions are apparently unable to shake off the problems presented by significant oversupply and activity remains too limited to provide any boost in rates,” Braemar Seascope said.

The Baltic’s panamax index .BPNI fell 0.06 percent, with average daily earnings dropping to $14,530, falling for a fifth day after 12 sessions of gains previously. Panamax vessels usually transport 60,000-70,000 tonne cargoes of coal or grains.

“Grain fixtures have been slow to emerge, with Chinese buyers remaining quiet,” Braemar said.

Adding to economic headwinds in western industrialised countries, a major source of shipping demand, are inflationary fears in China, which could potentially lead to further interest rate rises and a pullback in demand for ore, delivering another setback for shippers.

China’s consumer confidence index dropped in the fourth quarter, the second consecutive quarterly decline, as expectations for rising prices hurt sentiment. While there are indications of some vessel cancellations and delays, analysts expect deliveries to gather pace between 2011 and 2012.

Editing by Jane Baird

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below