Bloomberg News

Panamax Ship Rents Increase Most in Four Months on Coal, Grains

October 05, 2011

Oct. 5 (Bloomberg) -- Rents for panamax vessels, the largest ships that can navigate the Panama Canal, rose the most in four months as grain exports from the U.S. and coal imports to China boosted demand.

Daily rates advanced 2.7 percent to $14,567, according to the London-based Baltic Exchange, a provider of freight costs on 29 dry-bulk shipping routes. The gain was the biggest since May 25, and hire costs increased for an eighth session to the highest level since June 22. That helped to lift the Baltic Dry Index after six declines in a row.

Mine closings stemming from a fatal accident last month reduced Chinese coal output. Inspections of wheat and soybeans for export from the U.S., the top shipper of both crops, climbed in the week ended Sept. 29 from the prior week, Department of Agriculture figures showed Oct. 3.

Increased Chinese coal imports and a seasonal climb in grain shipments from the U.S. were supporting rates, RS Platou Markets AS, an Oslo-based investment bank, said in an e-mailed report.

The index, a broader measure of commodity freight costs, advanced 1.2 per cent to 1,908 as earnings rose for all four classes of dry-bulk ships it tracks. The gauge slid 26 percent over the past year, even after a 50 percent jump in August and September as higher Chinese iron-ore imports helped rents for capesize vessels, the largest in the index, to more than triple.

$24,813 a Day

Hire costs for panamaxes in the Atlantic Ocean for shipments to Asia, the highest-paying route for the vessels, gained 1.5 percent to $24,813 a day, data from the exchange showed. That was the highest level since April 1.

Atlantic-based panamaxes are being sought for bookings of several months, a sign that single-voyage rates will rise further, London-based shipbroker ICAP Shipping Ltd. said in an e-mailed report yesterday. The vessels account for about 23 percent of the world dry-bulk fleet of 8,678 ships, according to Clarkson Research Services Ltd., a unit of the world’s largest shipbroker.

Hire costs for capesize vessels that haul iron ore and coal gained 1 percent to $25,731 a day after a six-session, 12 percent retreat from the 10-month high of $28,949 registered Sept. 26. Rates will drop into the fourth quarter on weaker Chinese demand for imported iron ore, Erik Stavseth, an analyst with Oslo-based Arctic Securities ASA, said in an e-mailed report today.

Smaller supramax vessels advanced for a 22nd session, rising 0.5 percent to $15,796 a day, the highest level since March 31, exchange data showed. Availability of the ships in the Atlantic region was scarce as charterers sought bookings to load cargoes on South America’s east coast, according to ICAP Shipping. Rents advanced 9.6 percent over the last month, exchange data show.

Costs for handysizes, the smallest ships tracked by the index, climbed 0.6 percent to $11,154 a day, according to the exchange.

--Editors: Dan Weeks, Sharon Lindores.

To contact the reporter on this story: Michelle Wiese Bockmann in London at mwiesebockma@bloomberg.net

To contact the editor responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net


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