Bloomberg News

Grain-Ship Rates Rise to Seven-Month High as Bigger Vessels Fall

March 01, 2013

Earnings for Panamax vessels climbed to a seven-month high as bookings for grain exports from South America surged, while Capesize vessels that carry iron ore and coal slid to the lowest in five months.

Average daily hire costs for Panamax vessels, the largest to transit the Panama Canal, gained for an 18th day to $8,281, the highest since July 26. Rates advanced 48 percent last month. The Baltic Dry Index, a wider measure of commodity-shipping costs, gained 2.5 percent to 776.

Rates for Capesize vessels, which transport about 90 percent of the world’s ore, declined 1 percent to $4,236 daily, staying at the lowest since Sept. 17, according to the London- based Baltic Exchange, which assesses freight costs.

Panamax rates were “holding firm” on a seasonal boost in grains cargoes from east coast ports in South America that “keep the sentiment positive,” ICAP Shipping International Ltd., a London shipbroker, said yesterday in an e-mail.

A mining strike in Colombia that is curbing coal shipments and this week’s closure of iron-ore exporting ports in Australia further depressed rates for Capesize ships, Braemar Seascope Ltd., a London shipbroker, said by e-mail. The re-opening of the ports in Australia, the biggest shipper of the steel-making commodity, is boosting inquiries for single voyage Capesize bookings, and may stem the earnings slide, Braemar added.

The world’s 1,513 Capesize ships comprise about 40 percent of the dry-bulk fleet’s capacity.

Mine Strike

About 90,000 metric tons of coal is handled each day from Puerto Bolivar, the export port for the Cerrejon mine, according to Howard Gatiss, the chief executive officer of Coal Marketing Co. The Dublin-based marketer of coal from the mine, jointly owned by BHP Billiton Ltd. (BHP), Xstrata Plc (XTA) and Anglo American Plc (AAL), declared force majeure for the first time ever on Feb. 19 because of a strike at the mine, Gatness said by phone today. Force majeure is a legal step freeing a company from meeting contract terms for reasons beyond its control.

Average earnings for Supramax vessels that carry minerals and grains gained 2.3 percent to $8,170 a day, while charter rates for Handysizes, the smallest vessels tracked by the gauge, climbed 2.6 percent to $6,670, according to the exchange.

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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